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LIFE INSURANCE 




By ABB LANDIS 



REVIEW of the Business as ConducteoVby — - 
Friendly Societies, Fraternal Orders^^ife Com- 
panies, Industrial Companies and Open Assess- 
ment Associations, and History of the Five Kinds 
of Organizations. Explanations of Valuations. 
Methods of Computing Annual and Single Premiums for In- 
surances and Annuities, Application of Commutation Columns, 
Formulas for Benefits and Contributions. Compilation of 
Reserve Values and Forty Important Tables of Contributions 
and Commutation Columns for Death and for Disability and 
for Combined Death and Disability Benefits; and Six Mortal- 
ity Tables for Males, for Females, and for Males and Females 
Constructed on the Experience of Forty-three Fraternal Bene- 
ficiary Societies. ) Derived Values from the National Fraternal 
Congress Table of Mortality at 3%, 3J% and 4% Interest, 
and the American Experience Table and 4% Interest. Com- 
parison of Reserves Accumulated under Different Mortality 
Tables and Different Forms of Contracts. Illustrations of the 
Prospective and Retrospective Methods of Valuation are given 
in detail, with their relation to the Provisions of the Mobile 
and New York Conference Bills, together with Instructions 
for the Compilation of Statistics for Valuations and Annual 
Reports. 



PRICE, $10.00 PER COPY 



(Copyright, 1914, by Abb Landis) 

NASHVILLE, TENNESSEE 



BRANDON-NASHVILLE 



v\Ge-n\ 

A- 3 



APR 13 1914 

©CI.A371341 



INTRODUCTION. 

In response to an announcement that I would revise and rewrite the live books, 
"Friendly Societies and Fraternal Orders," "Insurance Past and Present," "Life In- 
surance Premiums, How Computed, Tested and Valued," "Analyses of Fraternal So- 
cieties," and "Life Insurance Problems" (all of which were out of print), there were 
received one hundred and nineteen subscriptions at $10.00 per copy for the proposed 
publication. The actual expenses incident to the publication exceeded the total of 
subscriptions. To many who had copies of the five books, $10.00 per copy appeared 
high for what they believed would be largely a duplication of the books already pur- 
chased. In consequence, many who have always been purchasers of other publica- 
tions are not numbered amongst the subscribers for this book. However, it is not a 
duplication of previous books, and I am responsible for making a somewhat mislead- 
ing first announcement. It was in mind at the time to merely revise and rewrite, but 
I have reproduced only the pertinent parts of the other publications, and give more 
pages of entirely new matter than the total pages of the other books, not including 
their tables. When this fact becomes known I hope to receive additional orders for 
the limited number of extra copies over the subscription edition. 

The new and exclusive tables given in the Appendix should be worth $10.00 to 
any insurance office, or to any consulting actuary. At any rate I have tried to make the 
book worth the price. To fraternal beneficiary societies, in addition to the two score 
of important tables, the discussion of Readjustment, Expenses, Computation of Con- 
tribution Rates, Valuation, Reserves, Actuarial Principles and the Application of Formu- 
las should give $10.00 in value. 

Not as an advertisement but as a reason for the subscription price, I have made 
this introductory statement. 

Many times I have been called as a witness in court proceedings, and invariably 

the attorneys desired to impress the court by having the names of the societies which 

have given me employment as an expert. Recently I was called upon for such a 

statement, and in giving a list of fraternal beneficiary societies on pages 75-79, it 

occurred to me that it would be a mark of appreciation to indicate by a star those 

which had favored me. There have been changes in official management, and there 

have been changes in actuarial advisers, but there remains to me a lasting advantage 

from the knowledge acquired through personal service rendered to the more than 

140 organizations, with their varied plans and experiences. 

Nashville, Tenn., March, 1914. 

A. L. 



ORIGIN OF FRIENDLY SOCIETIES. 

Associations of the nature of Friendly Societies existed two or three centuries 
before the Christian Era. In ancient Greece they were called Tkiases and sometimes 
Evanes. Thiascs is derived from Thiazo, which means to lead a chorus or dance. 
Evanes is derived from Evanos, which signifies a contribution, or a collection, especially 
for a feast. It also means money, in the same sense as evanisomai, meaning "I beg an 
alms" — or collect, or get together alms. The societies were formed for the purpose 
of celebrating festivals in common to some divinity, and the members being so asso- 
ciated in pleasure (and semi-religious worship) fell into such close relations and good 
fellowship that it followed inevitably from the promptings of human nature that they 
should render assistance to those who might be reduced to want through sickness. 
Collective pride and brotherly feeling led to the custom of providing suitable funerals 
for deceased members. Thus grew up private corporations (recognized by the State), 
which had their laws, officers, degrees, contributions and benefactions, and their regu- 
lar meeting places. They were, in ancient times, numerous in many important cities. 
At Rhodes there were the "Companions of the Sun," "The Sons of Bacchus," of 
"Minerva," of "Jupiter Atabyrius," of "Jupiter the Savior." At Athens, the "Hero- 
ists," the "Oregons," and the "Thiasotes." 

A society organized for the worship of "Diana and Antinous," according to an in- 
scription found 19 miles from Rome, at Lanuvium, made regular collections from 
members for the expenses of feasts and festivities and for the funerals of deceased 
members. In case of death there were allowed for funeral expenses 300 sesterces 
(about $11.00). The entrance fee was an amphora of good wine and 100 sesterces 
($375) and the monthly dues of five asses (about four cents). 

Most friendly societies are of modern origin. There is really no direct connection 
between them and the "Gilds," much less the more ancient orders. Association of 
individuals at public houses, or in the same kind of work, or otherwise, brought about 
good fellowship and personal regard, and produced the effort to assist one another. 
Human nature has been the same for ages and, whenever subjected to similar con- 
ditions, similar results follow. Thus have been formed the Friendly Societies of 
England and the Fraternal Beneficiary Societies of America. 

The Friendly Societies of Great Britain had their real beginning with the Act of 
1793, and the present organizations are the direct outgrowth of the institutions which 
accepted the benefits of registration under that Act. The Fraternal Beneficiary Orders 
in the United States had their real origin in the starting of the Ancient Order of 
United Workmen, by Father Upchurch, in 1868. Unfortunately, he was wholly igno- 
rant of what had been accomplished in Great Britain and failed to profit by seventy 
years of available experience along the lines upon which he was starting his great 
work. Other fraternal orders followed the A. O. U. W. in rapid succession, but none 
of them took advantage of similar experiments across the Atlantic. It will be seen, 
therefore, that the fraternal orders of America, while operating upon independent 
lines, have in effect repeated the history of the Friendly Societies in respect of promises 
to, and payments by, their members — especially have the errors and mistakes in rela- 
tion to benefits and contributions been reproduced in the conduct and management of 



fraternal orders. Had lessons been learned from the Friendly Societies these mis- 
takes and errors could have been avoided. 

Mr. George F. Hardy, Fellow of the Institute of Actuaries, and one of the most 
noted and prominent of English mathematicians, wrote a prize essay upon the Friendly 
Societies in 1887, and gave the following succinct: 

Historical Sketch. 

In considering the origin and development of the friendly society system, it is 
necessary to recognize the twofold purpose that these institutions have fulfilled. In 
the view of the actuary they are merely associations for the mutual assurance of certain 
benefits, generally in the case of sickness or death of any of the members. This, how- 
ever, represents only one side, and that by far the most recent, of the work of these 
institutions. A not less prominent and much older feature is to be found in the oppor 
tunities for social intercourse, companionship and mutual help, which such associations 
naturally afford — wants common to man in every state of society, and as old as civili- 
zation itself. Hence, from the earliest times, small communities have existed, drawn 
together by the common interests, tastes or pursuits of the members, such communi- 
ties being originally purely social in character, subsequently charitable and mutually 
protective, and only in recent times financial. 

Prior to the thirteenth century, aid was generally dispensed to the necessitous 
by the church. Being the central and only receiver of contributions for this pur- 
pose, and the sole dispenser of relief, its charitable functions covered the same kind 
of wants that our friendly societies deal with at the present time. These functions 
were to feed and clothe the destitute, to visit the sick, to house the homeless, to 
liberate prisoners, and to bury the dead — in its own words, vito, poto, cibo, redimo, 
tego, colligo, condo. 

In the thirteenth and fourteenth centuries a great social change took place. Agri- 
cultural serfdom was gradually breaking up, industries began to develop and a general 
tendency was manifested by society to forsake the socialistic order of things. As 
regards the relief of the poor, the first effect of the change was the taking over of 
part of the functions hitherto performed by the church by smaller communities of 
persons, each community, or guild, as they were called, having a more or less dis- 
tinct and well-defined object. 

The following paragraph in the statutes of the Guild of Smiths of Chesterfield is 
of" great interest : "When a brother is ill and needs relief, then he shall receive half 
a dime daily ; when brethren fall into poverty, then they shall go singly, on certain 
days, into the houses of their brethren, where each one shall be received civilly, and 
he shall obtain whatsoever he may need in the shape of food and clothing, as if 
he were the master of the house himself; and he shall also receive half a dime, like 
those who are ill, and then he shall go his way in peace." It is to these guilds that 
we must look, rather than the protective, trade guilds, which then existed, for the 
progenitors of our modern friendly societies. 

The period of the Reformation was another era of change in the direction of self- 
assertion and self-help, and the general tendency affected the guilds quite as much, 
perhaps, as the change from Catholicism to Protestantism. In the fifteenth century 
they began to decay. Corruption and abuses were not uncommon amongst them, as 
in the convents and other religious foundations. This state of things culminated in 
the sixteenth century in the passing of Acts 27, 31, and 37 of Henry VIII, and 1 of 
Edward VI, which enabled the king to confiscate the property of both guilds and 
monasteries. 

In the sixteenth and seventeenth centuries some of these institutions which had 
survived the preceding period, and still retained sufficient cohesion, were reformed, 
whilst many new societies were started, embodying some of the features of the guilds, 
but in conformity with more modern ideas. 

The relief and economic system of these societies, moreover, underwent a radical 
change in the direction of requiring fixed contributions to be made by the members 
for^ the grant of specific benefits. As an illustration of the financial basis of such 
societies, it may be interesting to note that in one society the subscriptions were 2d. 
weekly, to provide for benefits during sickness, of 6s. weekly for the first year, and 



3s. 6d. per week for the remainder of illness, while a levy of 6d. per member was 
made at each death. 

About the beginning of the eighteenth century a movement arose in the Guild of 
Masons which exercised a great influence in stimulating the rapid growth of friendly 
societies. By the introduction of mystic rites and observances, and by other changes, 
which need not be detailed here, the Guild of the craft of masonry was transformed 
into the Order of Freemasons. 

The friendly societies existing at the close of the eighteenth century appear to have 
been very similar in the nature of their operations to those of the present day. It is 
difficult to estimate, with any degree of certainty, the number of societies or their 
aggregate membership, but there is good reason for believing that they were at least 
as numerous in proportion to population as at the present day. Sir P. Colquhoun, 
in 1796, estimated the number of societies in London at 600, with a membership of 
70,000, while Sir F. M. Eden, five years later, considered that the whole kingdom 
might number 7,200 societies, with a membership of over 600,000. The amount of the 
sick pay allowed seems somewhat larger in proportion to wages than now, 6s., 8s., 
and 10s. a week being common sums ; while the modern system, now all but universal, 
of reducing the sickness allowance in cases of prolonged illness, appears to have been 
at this date, rare, although, in some cases, the allowance ceased after a specified period 
of 13, 20, or 26 weeks of illness, and in others provision was made for the super- 
annuation of members at a reduced rate of pay. 

It was very usual for societies at this period to limit their membership — 101, 81, 
and in some cases 51 or 41 members, was made the limit of a society; though what 
superstition lay in the use of these numbers it is impossible to say. 

The rules of the societies, as in earlier times, almost always exercised a paternal 
care over the morals and even the opinions of the members. 

The friendly society system, on the whole, worked well, but it had many defects 
which became increasingly apparent. The societies having no legal status were open 
to fraud and corrupt practices, no prosecution being possible except in the names of 
all the members, the societies being regarded at law as partnerships. The uniform 
premiums did not answer well ; as members grew old, younger men did not care to 
join, and bankruptcy often resulted. There was also too much feasting by members 
ar the expense of the funds. 

Mr. Hardy might have added to his last sentence the statement that "feasting" 
became such a feature, about the close of the eighteenth century, as to give the so- 
cieties the name of "Free and Easies." There was a reaction against the dissipation 
characteristic of these clubs, and a marble mason, named Bolton, who had gone to 
Manchester from London in 1809, began an agitation for reformed methods, and, in 
1812, succeeded in organizing an improved Order of Odd Fellows' Club, or Lodge. 
His scheme was to abandon the "free and easy" proceedings and make an effective 
provident institution, adapted to the w r ants of artisans whose occupations called them 
into various parts of the kingdom. Probably from this idea came the word "Inde- 
pendent," introduced into the name of his organization — as the "Lodges" at different 
places were to be independent of each other; while the "Manchester Unity" conveyed 
the other idea of general centralization in supervision and co-operation. The "Man- 
chester Unity: — Independent Order of Odd Fellows," was the pioneer of modern 
Friendly Societies, and today leads all others in the world in number of members 
and financial strength. Because of its age, its size, its success, its mortality and sick- 
ness experience, its errors and reforms, and its most comprehensive conduct in opera- 
tion, the history of the Manchester Unity will cover all of the ground necessary to 
be turned, in order to reap the benefits from a study of past action and present 
prosperity of Friendly Societies. 

Legislation. 

An important factor in the development of Friendly Societies was the several Acts 
of Parliament from 1793 to the last general law of 1896. As before stated, the pro- 



ceedings at the periodical meetings had so degenerated into excessive festivities that 
provision against sickness and death had become jeopardized. 

In 1787 Gilbert originated the idea of requiring each society to be registered in 
order to obtain legal protection; and it was his proposals undoubtedly which induced 
the framing and passing of the highly important Act of 1793, which practically settled 
the struggle between compulsion and voluntaryism in favor of the latter system. 

The Act of 1793 marked a new era in the history of Friendly Societies. Their 
legal position before the Act, and the various abuses that resulted from it, have 
already been referred to. The Act remedied abuses by establishing some supervision 
and some safeguards as to the management. It required, for example, the sub- 
mission of rules, and alteration of rules, to the justices at Quarter Sessions, who 
had power to confirm them or not at discretion. The objects of the society were 
to be specified, and a dissolution could only take place with the consent of the 
justices. 

On the 21st of June, 1793, this first of the Friendly Societies Acts was passed, 
and it was commonly known as Sir George Rose's Act, the 33 Geo. Ill, c. 54. 

It is not easy to systematize the various efforts made by the Legislature to con- 
trol or to encourage, as the case might be, the Friendly Society movement between 
1793 and the great Act of 1875. All of these attempts were necessarily of the 
nature of experiments, and were generally without any common plan. 

In 1818 a bill was introduced providing for the appointment of five public 
valuers — in the language of the bill, "persons skilled in arithmetical calculations" 
— to whom tables and rules might be submitted at fixed fees. The fear of 
government interference, however, which was so common among members of 
Friendly Societies, caused this provision to be struck out of the Act of the fol- 
lowing year (1819). This Act, however, provided that rules and tables of all 
future societies should both be confirmed by the justices at Quarter Sessions; and, 
moreover, contained the important provision that such justices should not confirm 
or allow any table of payments or benefits, or any rules dependent upon or con- 
nected with the calculations thereof, until it shall have been made to appear to 
such justices that the said tables and rules are such as have been approved of 
by two persons at least, known to be professional actuaries or persons skilled in 
calculation, as fit and proper according to the most correct calculation of which 
the nature of the case will admit. In the same way, dissolution could only take place 
with the consent of the trustees and under the certificate of two actuaries. 

The Act of 1829 contained several provisions of considerable importance. By this 
Act, nearly all previous legislation relating to Friendly Societies was repealed, and 
the law consolidated. The Act allowed any number of persons to form a society and 
to make rules, provided that these latter should declare the purpose of the society, 
and that they should be submitted to a barrister or to the Lord Advocate for 
certification. 

Perhaps the most important provision in the Act, however, was that requiring ; 
quinquennial returns of sickness and mortality to be made to the clerk of the 
peace, by whom they were to be transmitted to the Secretary of State and laid 
before Parliament ; all societies neglecting to make such returns losing the priv- 
ileges of the Act. The object was stated clearly in the Act to be the collection of 
data by which tables of the payments and allowances dependent on the duration 
of sickness and probability of human life may be constructed, "the present existing 
data of these subjects having been found imperfect and insufficient." 



By the Act of 1834, the powers of the justices to decline to certify the rules, 
in cases where they might deem the tables insufficient, was withdrawn, as also 
was the priority of claim by societies upon the effects of trustees and others. 
The purposes for which societies might be formed, however, were somewhat ex- 
tended, and were stated to be "for the mutual relief and maintenance of all and 
every the members thereof, their wives, children, relations, or nominees, in sick- 
ness, infancy, advanced age, widowhood, or at any other natural state or con- 
tingency whereof the occurrence is susceptible of calculation by average, or for any 
other purpose which is not illegal." It was carefully provided, however, that for 
any such general purposes, not being "natural contingencies," the contributions 
should be kept distinct and separate, or that the charges for these benefits should 
be defrayed by levies upon the members. The quinquennial returns were continued. 
The Act of 1846 imposed a penalty for failure to forward these returns, and ap- 
pointed a salaried registrar, who was only to register rules when tables were certi- 
fied by an actuary. 

There was introduced in the House of Commons in 1849, "A Bill to make better 
provision for the Certifying the Tables of Contributions and Payments of Friendly 
Societies, and for ascertaining from time to time the Solvency of such So- 
cieties. " This bill and several petitions thereon were referred to a Select Com- 
mittee of the House, who were empowered to take evidence and to report their 
observations thereon to the House. 

The principal paragraphs of the Report are as follows : 

Your committee having read the clauses of the bill referred to them, thought 
it advisable to apply to the House for leave to take evidence on the subject; and 
having examined 16 witnesses, _submit the following report : — 

As the object of all these voluntary associations is in some way to provide by 
mutual assurance for the relief of their members in sickness, in old age, or other 
natural casualty or infirmity, and of their families at their death, it is obvious that 
the welfare of all classes is much concerned in the sound constitution and good 
management of such societies. Of late years, by the exertions of benevolent per- 
sons, and by means of a more extensive and accurate collection of statistical ma- 
terials, better information has been obtained and diffused, of the calculations and prin- 
ciples upon which such societies ought to be based. Attention has been much turned 
to the defects inherent in the old clubs, and many societies on a sounder system 
have been established ; still it is stated by the secretaries and others who have at- 
tended the committee that in the great majority of Friendly Societies and clubs at 
present existing, an accurate examination of their accounts would show that the 
rate of contributions is not sufficient to enable them to pay the benefits insured thereby; 
that in many instances they have been compelled to reduce or suspend their allow- 
ances ; and those societies which have hitherto kept their engagements have probably 
been enabled to do so by a continual introduction of young members, so that the 
unsoundness of their tables has remained unnoticed. As a guide, then, and a safe- 
guard to the ignorant, it has often been suggested, and was pressed upon the com- 
mittee by some of the witnesses that the government should cause model tables 
to be constructed, and should enforce an adherence to them. 

Mr. Nieson, the noted actuary, was the first witness examined by the committee : 

Question: — Will you state to the committee what is the general result of your 
experience as to the sufficiency of the tables of Friendly Societies? Ans.: — That 
would require me to consider two classes of Friendly Societies. I believe Friendly 
Societies as they existed until a recent date were generallv unsound, and chiefly 
so from an inadequate amount of contributions being required by their tables, at 
least by those having tables. Many of the societies still have no tables, but the com- 
mittee are no doubt aware that the 9 and 10 Vict. (1846) makes it compulsory on 
societies established nfter the passing of that Act to have tables approved by com- 
petent authorities. To explain fully the reason why Friendly Societies have beer 



so unfortunate in acting upon inadequate terms would require rather a long disqui- 
sition. It, however, may be summed up in a very few words. The subject of 
Friendly Societies is altogether a very complicated one ; in fact there is no vital 
statistic so difficult to be understood. . . . Then having in view the purport of 
the original question, it will appear from this explanation, that it is no wonder 
that until a recent period Friendly Societies were found to be exacting inadequate 
contributions for the benefits they promised. The difference is very remarkable, 
and for some particular kinds of benefit which are provided for by Friendly So- 
cieties adopting one data, and adopting the more recent data resulting from my 
own investigation, it came under my own inquiry that the contributions necessary 
for some purposes would be doubled in consequence. So that Friendly Societies 
established 20 or 30 years ago upon inadequate data may now, on investigation, find 
that they had all along been charging one-half less for some of the paricular benefits 
than they ought to have charged ; and many societies have proved this by experience. 
They have broken down in consequence of inadequate contributions. Some societies 
being alarmed by a gradual deficiency taking place year after year in their funds, 
have had recourse to a great many expedients by which to prop themselves up. 

Mr. John Finlaison was the next witness and gave an account of the data 
from which he constructed his mortality tables in 1835, and Mr. A. G. Finlaison, 
the actuary, testified regarding the application of those tables to Friendly Societies. 
He stated that at the time (1850), few societies would accept a graduated table 
of contributions, according to age of entry. Those which had done so would only 
grade for ages above 45 up to about 55, when "the contributions for life, above that 
age (55) becomes so heavy that practically they are of no use to the society, no 
member being able to pay the rates." 

It must be remembered that the rates were for death as well as for sickness ben- 
efits, and that the cost for both increase with age, being excessive at the advanced 
ages. That fact was demonstrated by these societies, as here shown, prior to 1835, 
and became such a threatening danger by 1850 as to justify a government inquiry 
looking to a bill to make better provision for tables of contributions and payments 
and "for ascertaining from time to time the solvency of such societies." 

Thus it is seen that, 70 years ago, the same questions which are now presented 
in this country were considered and passed upon in England with the consumma- 
tion in a satisfactory solution in 1875. Had conditions in Great Britain been studied 
and advantage taken of them by fraternal organizers in America, the meeting of 
present difficulties need never have occurred. But since our troubles do now exist, 
the next best thing to having avoided them, is to remove them. In that work we 
can be greatly aided by giving heed to reforms inaugurated and remedies applied in 
the Mother Country. 

The Act of 1850 required a certificate in respect to annuity tables only, and lim- 
ited the amount of benefits, especially in the case of children's assurance, allowed 
investments with National Debt Commissioners at a fixed rate of interest of 2d. 
per cent per diem, and allowed branches to register. This year was memorable on 
account of the founding of the well-known Royal Liver Friendly Society, which within 
twenty years reached a membership of over half a million. 

Most of the features of the recent legislation were continued by the Acts of 1855,. 
1858, etc., the position of Friendly Societies remaining very much the same down to 
the important legislative enactment of 1875. 

Two years after the Ancient Order of United Workmen was organized in the 
United States, and ten to twenty years before many of our large societies were 
organized, the English Government had such consideration and regard for the 
importance and necessity of fraternal insurance that a Royal Commission was ap- 



pointed (1870) with instruction to thoroughly and exhaustively investigate the sub- 
ject and to report their findings to Parliament 

That investigation covered FIVE YEARS of painstaking and continuous work. 
The report of the Commissioners is the most valuable official contribution to insur- 
ance literature. Its importance cannot be over-stated. The Act of 1875 resulted 
from the broad and comprehensive recommendations of the Commissioners. 

That report and the resulting Act of Parliament should have been studied by our 
legislators. They should have been studied by those who have been organizing and 
managing the Fraternal Orders in this country. The report should now be studied 
by them in connection with the Act of 1896, and subsequent amendments. These 
comments upon the legislation affecting Friendly Societies in Great Britain, cannot 
be more appropriately concluded than with a quotation from that report of the 
Royal Commission of 1870 : 

Report of the Royal Commission. 

In addition to the evidence received by ourselves, a great mass of valuable in- 
formation is recorded in the report of our Assistant Commissioners, to whom we 
have to tender our best thanks for the zeal and ability which they have displayed in 
the fulfillment of their allotted portion of the work. 

Without pretending to have exhausted the subjects assigned to us for inquiry, we 
venture to think that the materials we have collected afford better means of under- 
standing them in their various bearings than any which have yet been laid before 
the public. 

We found, indeed, the field opened before us to be so wide that we felt obliged 
to limit it. It might, for instance, have been interesting to trace the connection of 
Friendly Societies with the Gilds of the Middle Ages, their analogy to which has 
often been pointed out, and of which the constitution has been lately laid open morft 
thoroughly to investigation than ever, through the publication of such works as the 
late Mr. Toulmin Smith's English Gilds ; or again, to compare the Friendly Societies 
of England with those of other countries. We have abstained from following either 

line of inquiry In obedience to your Majesty's commands we have had 

prepared a sketch of the course of legislation, and a summary of the Statute Law, 
relating not only to Friendly Societies, but to all the classes of societies with which 
the Registrar of Friendly Societies is connected. We have thought that in thus going 
somewhat beyond the terms of our instructions under this head, we should facilitate 
the consideration of questions which will presently arise with reference to the office 
and duties of the registrar. 

The evils to which Friendly Societies are most subject may be divided into (1) 
those which arise from the want of proper information, and which generally affect 
the principles on which the society is founded ; and (2) those which arise from 
improper management, which may be the result either of ignorance, or of negligence, 

' or of fraud. As regards the first class of evils, we believe that it is in the power 

1 of the government to do a great deal to correct it, without inconvenience to the 
public and without any undue interference with the liberty of the promoters of 
societies. As regards the second class, there is more difficulty, though we believe 

1 that something may be done in the way of securing publicity, and of providing readier 
means for the detection and punishment of fraud. Possibly, too, it may be found 
feasible and desirable for the government itself to enter directly into competition 

! with certain classes of societies and to afford the public an alternative provision 

1 for certain classes of objects. But this is a matter to which we shall refer here- 

; after. 

From the details previously given, it would appear that the condition of Friendly 
Societies is generally far from being such as to afford to their members any secur- 

f ity that they will receive the benefits for which they have subscribed. 

A main cause of the widespread insolvency of Friendly Societies is the inade- 
quacy of the rates of premiums for the benefits promised. 

Before a proper table of premiums can be constructed, the following preliminary 
inquiries are necessary: (1) What are the occupations and conditions of life of the 



8 

persons who are likely to constitute the society? (2) What rates of sickness and 
mortality will such a society probably experience? (3) What table of premiums prob- 
ably corresponds with such experience? 

We desire to draw particular attention to the suggestion which we have made, 
that the government should prepare and publish proper tables of contributions and 
benefits. 

It appears to us that the weak point which is common to all classes of Friendly 
Societies is the uncertainty which prevails as to the proper rates of premium which 
should be charged for the various classes of benefits which they promise. We have 
already drawn attention to this subject, and have shown that the inadequacy of the 
premiums is the cause of embarrassment even to some of the highest and best man- 
aged societies. To many it is the cause not only of embarrassment, but also oi 
insolvency and ruin. Two methods of checking this evil suggest themselves. Fresh 
efforts might be made to prepare trustworthy tables adapted to all the various cir- 
cumstances with which different societies have to deal ; or, recourse might be had, 
more systematically than at present, to periodical valuations of the assets and liabil- 
ities of each society, followed by the necessary corrections of the table of premiums 
and benefits. We believe that both of these measures should be adopted. The 
government should employ competent actuaries to draw up some model tables, which 
might be commended to the promoters of Friendly Societies, though their adoption 
should not be made compulsory. It would probably not be long before their value 
would be recognized; and we may be sure that there would never fail to be persons 
interested either in existing societies or in the welfare of the classes for whose ben- 
efit they are intended, who would take the trouble of comparing the tables and rules 
of particular societies with the government standard, and of ascertaining how far 
they were or were not in accordance with them. 

(Following this suggestion the comprehensive report by the Chief Registrar was 
published in 1880, with tables of rates, etc. In 1896 followed the elaborate report by 
Mr. Sutton, Actuary to the office of Chief Registrar. — Landis.) 

We attach, however, much more importance to properly conducted periodical valu- 
ations, and to corrections made from time to time in the tables according to the re- 
sults of those valuations, than to the original tables themselves; and we consider that 
such valuations should be made compulsory upon all registered societies. Two difficul- 
ties at present discourage many societies from having recourse to them, though all 
persons conversant with the subject agree as to their utility and importance. The 
first difficulty is the costliness of the process ; the second the uncertainty of the 
results arrived at by different actuaries proceeding on different principles. Both 
difficulties might be, to a great extent, obviated, if model forms, not only of tables 
but also of valuations, were prepared under the direction of the government. With 
these, and with the aid of well arranged returns, which the society would have to 
furnish, valuations might be conducted cheaply, and on an uniform principle. Perhaps 
it would be well that the government should in the case of the first valuation of 
any society allow it to call in the services of the government valuer free of charge. 
For subsequent valuations a small fee should be demanded. 

Tt is only possible to give a brief outline of the changes effected by the great 
Act of 1875. By this Act the law relating to Friendly Societies was both consolidated 
and amended. 

The following provisions of the Act may be mentioned as among the most 
important : 

(1) The maintenance of the voluntary principle, as respects registration and the 
actuarial certification of tables. 

(2) The continuance of the quinquennial and annual returns. 

(3) The limitation of benefits, especially for infants' assurances, this provision 
also applying to industrial assurance companies. 



f the 
these 
ables, 



9 

(4) The authorizing of the treasury to issue regulations from time to time, and 
the power conferred on the registrars to appoint inspectors, when duly requested, to 
inquire into the management of societies, and call general meetings of the members. 

(5) The compulsory valuation of all registered societies every five years, and the 
provision for the appointment of public valuers by the treasury, who might undertake 
such valuation. 

(6) The reconstruction of the Registry Office, resulting in the appointment of 
an actuary to the registrar. 

A few amending Acts, of very little importance, were passed during the twenty- 
one years from 1875 to 1896. In the latter year a thorough revision was made oi 
laws affecting Friendly Societies, which is known as the Friendly Societies Act, 
August 7, 1896, and which (with a few minor changes) remains in force and effect 
at this writing). 

The Act of 1896 was the most important since the first one in 1793. Its detailed 
provisions are well worth careful study. 

In 191 1 the Parliament of Great Britain enacted a general law, a scheme for 
National Insurance of the working men and women of that country. The scheme 
so nearly duplicates the plans of Friendly Societies in the way of granting benefits 
that a mutual arrangement for cooperation was made between the government and 
the Societies "approved'' by the Commissioners. Whether or not the final out- 
come will be exclusive compulsory State Insurance to the absorption or dissolu- 
1 tion of Friendly Societies as independent organizations is a mooted question. Well 
informed and experienced officials of the societies are pessimistic in their forecasts 
of the future. The relations between the governmnt and the societies are compli- 
cated and as yet unsettled, but it is to be hoped that these great Provident Institu- 
tions may be able to continue their beneficent work by granting additional protection 
to the comparatively small benefits allowed under the National Insurance Act. 

FRATERNAL BENEFICIARY ORDERS. 

The Fraternal Beneficiary Associations in the United States and Canada were 
! modeled on the pattern of Fraternal Orders with secret work a dominating feature, 
1 There was a central authority (usually assuming the name of "Supreme") ; and 
.subject to central supervision; there were subordinate bodies with authority circum- 
scribed to a State or "Jurisdiction," (usually assuming the name of "Grand') ; and, 
. subject to dispensation and regulation from the "Supreme" or "Grand" jurisdictions, 
1 there were local "Lodges," or "Councils," or "Camps," or "Tents," or other designa- 
tion characteristic of the organization. 

The words quoted from Hardwick, written sixty years ago concerning the 
early Friendly Societies, apply to the Fraternal Beneficiary Societies as they existed 
! in this country. 

"The singularity of some of their names, the secrecy, the mummery, and the 
mystery which attended their proceedings, proved peculiarly attractive to the great 
body of the operative population, while they at the same time excited the distrust, 
j the suspicion, and sometimes the ridicule of the wealthier and better educated por- 
tions of society." 

The local lodges, or councils, or by whatever name known, usually provided some 

' form of relief to living members, while the grand or supreme bodies issued certificates 

promising a death benefit "not to exceed" the amount of one assessment upon all o f 

i 



10 

the members, or the amount of one assessment "not to exceed" a designated sum 
varying from $500 to $5,000. 

The Ancient Order of United Workmen, the American Legion of Honor, the 
Knights of Honor, the Knights of the Maccabees, the Catholic Mutual Benefit Asso- 
ciation, the Catholic Knights of America — in fact, all of the original and well known 
societies in the United States and Canada — levied a level and uniform assessment, 
regardless of age, occupation, or residence, and with meagre restrictions upon health, 
basing the number of assessments upon the claims incurred and collecting them from 
the survivors after deaths were reported. 

The certificate of membership had neither the form nor design of a contract 
of insurance. 

The promise to pay a sum at the death of a member, not in excess of the volun- 
tary contributions of survivors, was not made in the way of a binding financial obli- 
gation, but rather in satisfaction of the law of social benevolence which requires that 
every man shall endeavor to assist others. 

The limitation of the money benefit to the contributions that might be received 
for its payment placed the transaction in the category of a charity. In these cir- 
cumstances it gave little concern to the officials of large societies when the original 
and simple form of certificate of membership was changed to bond-like appearance 
and with the maximum possible amount of benefit largely displayed in gilt letters. 

The effect upon the holder was an assurance of a definite sum payable at death, 
and the development finally was to produce an insurance contract of a fixed char- 
acter enforceable at law. 

However, the members changed their conceptions of fraternal protection only in 
respect of the benefit side of the contract. They continued to regard the contribution 
side as demanding nothing more than voluntary donations in the way of charity. 

Until about 1888 (nearly 100 years after the first Friendly Society Act) legis- 
lators placed the Fraternal Beneficiary Associations in the list with charitable organ- 
izations and did not undertake to regulate or supervise them, contenting themselves, 
when occasionally moved to action, with restrictive measures that limited their scope 
of operation, or exempted them altogether. 

Insurance, Commissioners paid little or no attention to the Fraternal Or- 
ders, treating them as without the realm of life insurance organizations — and, indeed, 
holding that they would be encroachng upon the rights and privilges of the life com- 
panies were they to issue life insurance contracts with mathematically determined 
rates of contribution. 

In this connection is given a recent ruling of the Commissioner of Internal Rev- 
enue, which reflected the prevailing opinion held by officials in the executive and 
judicial departments of State and National governments of the Union. While pass- 
ing upon the question of the taxation of policies, Commissioner Wilson discusses the 
question of profit, and addresses himself to what is contemplated by the phrase 
"organized and conducted not for profit." He says, in .part : 

An association coming within the exempted classes which is organized and doe 
business on the plan of levying a sum upon its members to pay losses, or losses and 
expenses, as incurred, is prima facie not doing business for profit. This is in case | 
where the assessments are made to provide for the payment of losses as they occur. 

Such companies as make assessments based upon fixed premiums, to be collected 
at regular intervals, without regard to whether or not a loss actually occurs, are 
companies that are, in the opinion of this office, prima facie conducted for profit. 

Progress toward permanency would be forever blocked were such an opinion to 
take control of legislatures. Only ignorance of insurance principles and a wrong 



1 



1 1 

conception of fraternal protection can excuse such an opinion. A still more exag- 
gerated case is the following from a decision by the Supreme Court of Pennsylvania: 

The first specification charges error in admitting the application thus referred to. 
This is grounded on the assumption that defendant (the A. O. U. W.) is an In- 
surance Company, and the contract sued on is a contract of assurance on the pari 
of the plaintiff's husband for her benefit. . . . Such assumption, however, h 
unwarranted. The defendant is NOT AN INSURANCE COMPANY, but belongs to 
the distinctly recognized class of organizations known as benevolent organizations. 
. . . What is known as a BENEVOLENT ORGANIZATION, however, has a 
wholly different object and purpose in view. The great underlying purpose of the 
organization is not to indemnify or secure against loss ; its design is to accumulate a 
fund from the contributions of its members for "Beneficial or Protective purposes," 
to be used in their own aid or relief, in the misfortunes of sickness, injury or deatii. 
The benefits, although secured by contracts, and for that reason to a limited extent 
assimilated to the proceeds of insurance, are not so considered. Such societies are 
rather of a PHILANTHROPIC OR BENEVOLENT CHARACTER; their bene- 
ficial features may be of a narrow or restricted character ; the motives of the mem- 
bers may be, to some extent, selfish ; but the principle upon which they rest is founded 
in the considerations mentioned. These benefits, by the rule of their organizations, 
are payable to their own unfortunates out of funds which the members themselves 
have contributed for the purpose, NOT AS AN INDEMNITY OR SECURITY 
AGAINST LOSS, but as a PROTECTIVE RELIEF in case of sickness or injury, 
or to provide the means of a decent burial in the event of death. Such societies 
have no capital stock. They yield no profit, and their contracts, although beneficial 
and protective, altogether exclude the idea of insurance, or of indemnity, or of secur- 
ing against loss. 

The original idea of benevolence and charity still prevails and the legal status of 
Fraternal Beneficiary Societies is by no means settled. Court decisions are conflict- 
ing, but fortunately uniformity in State legislation is making rapid progress, and the 
day is not distant when the business of these Associations will be conducted upon 
safe and sound methods under supervision wisely designed for the good of all con- 
cerned. 

It takes time and patient nursing to cure an ailment such as afflicted the Fraternal 
Beneficiary Societies. 

Consider their origin and one cannot be surprised at the resulting financial diffi- 
culties in which they became involved^ 

Why should these Societies have been considered to assume any deferred finan- 
cial obligation when the outstanding promise was to pay as a benefit the sum of 
one assessment, provided it did not exceed a stated amount? 

Such a promise could be fulfilled on the payment of one dollar, if that were the 
amount of one assessment. 

Why should such Societies accumulate funds as a guarantee for the settlement of 
deferred liabilities in the way of future death claims? They have the right to levy 
an unlimited number of assessments. If one assessment will not satisfy the matured 
claims, they can levy another. If still unsatisfied, they can levy another and another 
until the claims are paid, or until dissolution results from withdrawals. 

There w 7 as never a simpler scheme for the liquidation of liabilities ! 

Its simplicity is not altogether in the power of repeated levies ! 

If the assessments produce no funds, that fact discharges the debt ! 

From the viewpoint of the analyst, the post mortem plan of assessments-as- 
needed is a perfect scheme for financing a concern on Hope. 

But Hope is the greatest of flatterers, and thousands have been allured by her 
prodigal promises and plausible presentations ultimately to find they had no other 
possession but Hope, and finally to realize nothing but Despair. 



12 

It is a sad commentary upon the progress of the human race that good men 
with good intentions so often will adopt defective means for the execution of good 
purposes. 

And more regrettable is the fact of the repetition, generation after generation, of 
defective means for good purposes, ending in failure. 

Probably most regrettable of all is that the trained minds of judges and legislators 
go far astray in their analysis and conception of unsound plans of life insurance — 
notably the learned Justices of the Court of Appeals of the Great State of New York. 

For a long time neither the managers nor the members of Fraternal Beneficiary 
Societies, nor the courts, nor the legislatures seemed able to distinguish between 
the fraternal and the business side of these Associations, notwithstanding the fact 
that the managers were construing and the members holding the certificates as insur- 
ance contracts with fixed benefits. 

There was and is an honest conviction, not readily surrendered, that fraternal 
co-operation relieves societies from the business necessity of demanding contributions 
equivalent in value to the benefits promised, and from being assessed according to 
the insurance risk assumed. 

At this time one of the greatest of our American Fraternal Beneficiary Societies 
is in a struggle with its members and the courts to determine the question of ade- 
quate contribution rates, and whether or not they can be enforced against members 
who relinquish not a dollar in their demand for protection to the full face value of 
their certificates. 

Proof beyond dispute is submitted to show that some members contribute to the 
funds less than the actual costs of their protection, and that the deficiencies thus 
created must be made good by appropriations from the contributions of other mem- 
bers who pay in excess of the equitable costs of their protection. 

Notwithstanding this undisputed fact, the members, who receive benefit for which 
they do not pay its full worth, contend that it is a condition incident to fraternal co- 
operation for mutual protection. 

They believe, or pretend to believe, that it is consistent with brotherly and fra- 
ternal conduct to solicit persons to join these Societies and then charge them in 
excess of the costs of their protection, and to appropriate such excess to their own 
benefit. 

Hundreds and hundreds of times I have stood before conventions and gatherings 
of fraternal people and demonstrated from the actual experience of the Society, to 
whose members I was talking, that some of those present were contributing less 
than half of what it cost the Society to carry the risk of their insurance benefit, and 
that the Society's loss on them was made up from surplus contributions of others. 
I have explained the inequity of such procedure. I have pointed out that it is not 
different in principle to appropriate from a common trust fund an unequal share of 
purchased articles — as might be the case in a co-operative store where some would 
pay less than the cost of what they bought, while others would be over-charged. I 
have put the question directly to my auditors, whether or not, if they were con- 
tributors to the funds of a co-operative store, they would support and continue a 
management which let some members have groceries at 50% of the cost and charged 
others 150%. I have never yet had any one defend such a plan of management for 
a cooperative store, or for a savings bank where deposits of one were paid out to 
another, even when it was assumed that those questioned were the persons to be 
benefited. Nevertheless, I have heard some of the same people vigorously and elo- 
quently defend the insurance plan of fraternal orders under which members were 



13 

charged more than their equitable proportion in order that others might pay less than 
their equitable proportion of the common cost of insurance protection to the whole 
membership. 

The argument in defense was that such bad been the original conception of fra- 
ternal co-operation for mutual insurance protection; 

That to change the plan after a number of years of operating under it would 
impose upon the old members, and "freeze out" the aged who had "borne the heat 
and burden of the day'' when personal work and sacrifice were required for the 
Society's very existence ; 

That the younger members of today must, in their turn, make sacrifices in the 
way of contributions toward the cost of protection for those who had grown grey in 
the service ; 

That while it would be unfair and unjust and probably dishonest to overcharge 
one patron of a co-operative store in order that another might have his purchase at 
less than cost, and while it certainly would be dishonest to take from the savings 
account of recent and young depositors in a savings bank for overpayment to aged 
patrons because they had lost their earning power and needed the money, and while 
it would be wrong to permit a regular life insurance company to charge some more 
and others less than their equitable share for insurance cost, yet the reason that it 
would be unfair and unjust or dishonest, or wrong in these instances, was because 
it was not the original nor recognized plan for the operation of co-operative stores, 
or savings banks, or life companies, and therefore they were not to be compared with 
Fraternal Beneficiary Societies which were and should be altruistic in their practices 
and charitable in their purposes and altogether benevolent in the distribution of 
funds ; 

That there was no distinction between members in respect of individual share in 
the costs of protection, because each member contributed toward a common fund from 
which claims for benefits were paid, and no member had any individual interest in 
or right to that fund unless in the way of claim for benefit; 

That it was never contemplated in fraternal co-operation to resort to the com- 
mercial requirement of business conduct by demanding a contribution rate propor- 
tionate to the insurance risk, and that such a practice would be as foreign to the 
intents and purposes of these mutual associations for the relief of the distressed and 
needy as would be the attempt to fix the amount of donation for each voluntary con- 
tributor toward any charity fund. 

Fraternal Beneficiary Societies were stamped in the beginning with the character 
of charitable and benevolent institutions. 

As heretofore stated, the members tenaciously insist upon the continuance of that 
imprint upon their assessment levies, while they have no hesitancy in construing the 
promise of benefit into a fixed contractural and financial right. 

The New York Court of Appeals has rendered opinions sustaining the contention 
that the contribution rate cannot be adjusted scientifically and equitably to the in- 
surance risk, without the consent of the members, while holding that the members 
have a vested right to demand the full amount of benefits promised. 

The Court concedes that extra assessments may be levied when needed for the 
payment of matured claims, but the general conclusion is in support of the con- 
tention that Fraternal Beneficiary Societies, as at present constituted, are not able 
to enforce the well-established rule that promised contributions should be adjusted 
to provide equitably for promised benefits. 



14 

Undisputed and unquestioned evidence was presented to the Justices in which it 
was shown that ultimate failure was inevitable under the plan of operation where 
the contribution was not adjusted to the cost of protection according to the insurance I 
risk assumed. 

It was demonstrated by expert testimony, and proved by the actual experience of 
societies which had tried it, that recourse to extra assessments could delay but would 
not prevent ultimate failure and final dissolution, and the sacrifice of the protection 
of persistent survivors as well as the sacrifice of the protection of those forced out by 
repeated assessments. 

The reply was, that the Court was not responsible for a plan that would result 
in disaster — that was the concern of those who inaugurated and accepted insurance 
under the plan — that the Court did not formulate the plan, but merely decided how 
the plan in practice should be operated consistently with its conditions and pro- 
visions, and that the recognized legislative body of the society has not power to 
change those conditions and provisions even to save the corporate existence and to 
conserve the interest and carry out the desire of the great majority of the members. 

The Justices of the Court of Appeals arrived at the same conclusion as have the 
members who protest against a change in the existing plan of assessments. 

But the Justices came to their conclusion by an entirely different course of rea- 
soning. They construe the certificate as a business contract between a corporation 
and an individual and exact the letter of the bond ; they disregard the contention that 
the corporation is a fraternal mutual co-operative association of individuals related 
to each other in the dual capacity of insurer and insured, and therefore are obligated 
to make proper and adequate provision for the payment of benefits as a condition 
precedent to making claim for benefit; they proceed to the decision of the dispute 
between the corporation and a certificate-holder without reference to the fact that 
the latter is part and parcel of the corporate body and equally responsible with every 
other member of the corporation for its obligations and the proper provisions for the 
performances of its promises. 

I have presented at length this phase of the Fraternal Society situation because j 
of its obvious difficulties. 

We have members contending that it is in accord with fraternal principles and 
brotherly relations to impose upon young and recent entrants (as long as they will 
bear) part of the burdens of older members resulting from granting insurance at 
inadequate contribution rates. 

We have courts deciding and commissioners ruling that Fraternal Beneficiary 
Societies are not Insurance Companies, and do not undertake to indemnify against 
loss, and therefore must be listed with charitable organizations. 

Then we have other and more recent court decisions to the effect that Fraternal 
Beneficiary Societies are business corporations bound by the letter of their contracts, 
though the performance kills. 

Finally we have the reassuring and more pleasant aspect of legislative enactments 
by many State Legislatures (that of New York amongst them) wherein the Fraternal 
Beneficiary Societies are recognized as mutual co-operative insurance associations 
with the right and power to adjust required contributions to promised benefits in 
such manner as will render promises possible of performance and preserve cor- 
porate existence — and at the same time recognizes them as business corporations with 
obligations to their members and to the public which demand detailed and public 
exhibit of financial condition, past, present and prospective. 



15 

The development of the Fraternal Orders is strikingly similar to that of the 
Friendly Societies, which Mr. Hardy summed up in the terse sentence as "being 
originally purely social in character, subsequently charitable and mutually protective, 
and only in recent times financial." 

Likewise the members of Friendly Societies advanced more rapidly in the appre- 
ciation of the financial obligation to them from the Societies than from them to the 
Societies. 

In his illuminating essay on "Friendly Societies and Sick Clubs," Mr. Reuben Wat- 
son, after alluding to the demand by members for the full benefit promised, remarks : 
'The enquiry by the Royal Commission unquestionably gave an impetus to the newly 
awakened discovery that the adoption of graduated contribution tables must be con- 
sented to in the interest of justice and right. Unfortunately, it is difficult to make 
such matters clear to the untrained mind, in which there is, however, often much 
ingenuity. Members of Friendly Societies do not always take kindly to reforms 
which necessitate exposure of insufficient contribution rates. When proposed reforms 
carry with them increased contribution rates they have been known to be opposed 
with unrelaxing vigor, and pet schemes and haphazard promptings have received 
remarkable support in opposition to the soundest principles." 

The concluding sentences have application to the Fraternal Beneficiary Orders 
in this country. 

The opposition in the United States and in Great Britain by members of the 
Societies to increased contribution rates brought about, in both countries, the expe- 
dient of applying increased rates to new members and leaving those for existing 
members unchanged. This only delayed the day of reckoning. 

The gross injustice of collecting from new entrants more for the same benefit 
than from older members similarly situated in respect of risk at date of entry and 
appropriating the excess to the use of the older members, finally forced the man- 
agements, in both countries, to put aside the excess to the special benefit of the new 
entrants, and thus establish an adequate rate class. 

The option is given to the older members to enter this class — usually without 
medical examination and often with concessions that rendered the rates for the new 
class inadequate. 

The most frequent, and the most disastrous, option is to permit the older class of 
members to take the new graduated rates as at age of entry. 

This concession repeats the injustice of discriminating between members simi- 
larly situated. 

The new member, fresh from medical examiner, pays the rate for his present 
age, say 35, while the re-rated member of present age 35 is given the rate at age 25, 
because he entered the Society at that age. If the graduated rate is the proper and 
correct rate at age 35 for the freshly examined member, certainly it is none too low 
for the member at his present age and ten years removed from medical examination. 

The most serious condition confronting American Fraternal Beneficiary Orders 
has been brought about by re-rating at ages of entry. 

In most instances the members concluded, or were led to believe, that the re- 
adjustment placed the Order in a financially solvent position. 

The contribution rates were often those deduced from some recognized table of 
mortality, with seldom a higher interest assumption than 4%, and these rates were 
advertised as sufficient upon authority of some actuary. 

The advertisement was mainly directed to securing new members. There was 
omission of the fact that, in respect of members who had entered the Society pre- 



16 

vious to a certain date, the adequate rate had been made inadequate, say, for age 25 
by being applied to members at 26, 27 ... 30, 35, 40 and, sometimes, 50 years of 
age; and similarly in the application of other rates at ages advanced beyond those 
for which they were computed. 

Many times the managing officials and consulting actuary have acquiesced in the 
re-rating at ages of entry, first because it was left to them to accept that or nothing, 
and second because there was some hope that savings from favorable mortality and 
gains from interest earnings and forfeitures by lapse, and from the natural recupera- 
tive force of these Societies, might overcome the deficiency created by such readjust- 
ment. This subject is hereafter discussed in detail. 

Altogether and notwithstanding admittedly untoward conditions and existing 
disadvantages, progress toward solvency by the recognition and adoption of true 
principles is being made steadily and surely. 

Improved prospects are opening up in all directions, whether we view the situa- 
tion from the standpoint of the managers, or the members, or the insurance com- 
missioners, or the legislators, or the courts. 

The requirements of annual valuations are spreading statistical knowledge that 
gives a better understanding of the relation between promised benefit and required 
contribution. 

Since the agreement at Mobile in 1910 between the Insurance Commissioners and 
representatives of Fraternal Beneficiary Orders upon a Uniform Bill providing for 
valuation, there has been acquired more information in regard to the value of deferred 
promises to pay death and disability benefits than gained during the entire period of 
operation to that date. 

The fact that statutory enactment compels valuation has caused a general inquiry 
into the meaning and effect of valuation. This subject will be treated at length 
later on. 

Legislation. 

The history of legislation affecting Fraternal Beneficiary Societies is so closely 
identified with the history of the National Fraternal Congress and the Associated 
Fraternities of America that separation will not be made in references to them. 

In pursuance to a resolution adopted in June, 1886, by the Supreme Lodge of the 
Ancient Order of United Workmen, a committee was appointed composed of Hon- 
orable A. L. Levi, of Minneapolis, Minn.; Honorable O. F. Berry, of Carthage, 111.; 
Warren Totten, Esq., Barrister, etc., of Woodstock, Ontario, Dominion of Canada, 
and Honorable Leroy Andrus, of Buffalo, N. Y., to take such action as would bring 
about a meeting and permanent organization of representatives of Fraternal Beneficiary 
Societies. The call for such a meeting was issued September 1, 1886, by the Chairman 
of the Committee, Honorable Leroy Andrus, and on November 16, 1886, the repre- 
sentatives of various Beneficiary Societies of the United States and Canada, respond- 
ing to the call, met at the Riggs House, in the City of Washington, D. C, on Tuesday 
at high noon. The following is a list of the Societies and their representatives : 

Ancient Order of United Workmen — Leroy Andrus, Buffalo, N. Y. ; Warren 
Totten, Woodstock, Ontario; A. L. Levi, Minneapolis, Minn., and A. L. Berry, Car- 
thage, 111. 

Knights of Honor — W. H. Barnes, San Francisco, Cal. 

United Order of Honor — A. W. Wishard, Indianapolis, Ind. 

Order United American Mechanics — C. H. Stein, Baltimore, Md. 

Order United Friends — O. M. Shedd, Poughkeepsie, N. Y. 

Empire Order of Mutual Aid— J. H. Meech, Buffalo, N. Y. 



17 

Select Knights, A. O. U. W.— R. C. Hill, Buffalo, N. Y. 

Endowment Rank Knights of Pythias — Halvor Xelson, Washington, D. C. 

Equitable Aid Union — R. N. Seaver, Columbus, Pa. 

Knights of Maccabees — N. S. Boynton, Port Huron, Mich. 

Rayol Arcanum — A. C. Trippe, Baltimore, Md. ; J. Haskell Butler, Boston, Mass. 

Knights of Columbus — C. P. Kriezer, New York City. 

Knights Golden Rule — J. D. Irving, Toledo, Ohio. 

United Order of the Golden Cross— A. M. McBath, Washington, D. C. 

Royal Templars of Temperance — C. K. Porter, Buffalo, N. Y. 

Home Circle — J. H. Butler, Boston, Mass. 

It was estimated by the Secretary that the orders and their membership repre- 
sented at the Congress were as follows : 

Ancient Order of United Workmen 175,000 

Knights of Honor 130,000 

Royal Arcanum 70,000 

Order of United American Mechanics 40,000 

Royal Templars of Temperance 22,000 

Equitable Aid Union 17,000 

Endowment Rank, Knights of Pythias 16,000 

Order of United Friends 12,000 

Select Knights, A. O. U. W 1 1,000 

Knights of Maccabees 11,000 

United Order of the Golden Cross 9,000 

Empire Order of Mutual Aid 8,000 

United Order of Honor 7,000 

Knights of the Golden Rule 9,000 

Home Circle *,. . 5,000 

Knights of Columbia 2,000 

A grand total of 535,000 carrying insurance to the amount of about $1,200,000,000. 

Very little more was done at this first meeting than to declare its purposes, pre- 
scribe the characterstics requisite for eligibility in its membership, elect officers to 
give it an organization and direct the appointment of several committees for special 
fields of work. The first officers of the Fraternal Congress were as follows : 

President — Leroy Andrus, A. O. U. W. 
First Vice-President — A. H. Barnes, Knights of Honor. 
Second Vice-President — John Haskell Butler, Royal Arcanum. 
Recording Secretary — R. C. Hill, Select Knights. 
Corresponding Secretary — O. M. Shedd, Order United Friends. 
Treasurer — Halvor Nelson, Endowment Rank, Knights of Pythias. 

The first regular annual session of the National Fraternal Congress was held at 
the hall of the Order of United Friends, in Philadelphia, November 15, 1887. At the 
evening session of the first day the following preamble was read and the resolution 
adopted : 

Whereas, There are a large number of Associations, under various names, pre- 
senting to the public propositions of various characters, that have arisen since, and 
are meeting with favorable reception because of the success of the standard legitimate 
fraternal benefit orders, and while it is not the province of this Congress to either 
reflect upon or endeavor to retard the growth or prosperity of any organization, yet 
we deem it a duty to ourselves and the public to define what in our judgment is a 
Fraternal Society, and to be recognized as such. Therefore, we recommend the 
adoption of the first resolution amended to read as follows : 

Resolved, That a Fraternal Society is an organization working under ritual, hold- 
ing regular lodge or similar meetings, where the underlying principles are visitation 
of sick, relief of distress, burial of dead, protection of widows and orphans, educa- 
tion of the orphan, payment of the benefit for temporary or permanent physical dis- 
ability or death, and where these principles are an obligated duty of all members 
to be discharged without compensation or pecuniary reward, where the general mem- 
bership attends to the general business of the order, where a fraternal interest in the 



18 

welfare of each other is a duty taught, recognized and practiced as the motive and 
bond of the organization. 

Resolved, That any association, however worthy in business point of view, not 
possessing the characteristics above mentioned, cannot be legitimately termed a "Fra- 
ternal" Society or Order. 

The Committee on Legislation reported that there had been no changes in the 
laws of the several States affecting Fraternal Beneficiary Societies except in Missouri. 
It was complained that the legislation in that State was entirely in the interest of the 
assessment Life Insurance Companies and was antagonistic to the people at large who 
were mainly interested in Beneficial Societies. The committee claimed that "Its effect 
was to force the thrifty persons of moderate means, who are always the bulwark of 
a State, to pay excessively for life insurance in the interest of corporations who con- 
duct the business solely for profit, and to deprive them of the privilege and advan- 
tage of associating themselves together in the fraternal societies for the benefit of 
their wives and children. Its animus is plainly shown by a brief review of the law. 
As a whole it is copied from the Massachusetts Act of Assembly of 1885. The first 
section of the Massachusetts Act is as follows : 

Every contract whereby benefit is to accrue to a party or parties named therein 
upon the death or physical disability of a person, which benefit is in any degree or 
manner conditioned upon the collection of an assessment upon persons holding 
similar contract, shall be deemed a contract of insurance on the assessment plan and 
the business involving the issuance of such contracts shall be carried on in this com- 
monwealth only by duly organized corporations, which shall be subject to the pro- 
visions and requirements of this Act; but nothing herein contained shall be construed 
as applicable to organizations which conduct their business as fraternal societies on 
the lodge system or to organizations which do not employ paid agents for soliciting 
business or limit their certificate holders to a particular order or fraternity or to the 
employees of a particular order or fraternity or to the employees of a particular town 
or city, designated firm, business house or corporation or to organizations which are 
unincorporated and limit the amount of every certificate issued to a maximum amount 
and not exceeding $500 on any one risk. 

The Missouri Act copies the first section of the Massachusetts law verbatim, but 
omits the words exempting fraternal beneficial societies from its operation. The 
omitted words are, "but nothing herein contained shall be construed as applicable to 
organizations which conduct their business as fraternal societies on the lodge sys- 
tem," etc. 

The committee was very bitter in their criticism of the Act and of the Insurance 
Commissioner of Missouri, because of the fact that the fraternal societies were not 
exempted from the law. 

Chairman A. C. Trippe, of the Royal Arcanum, was very eloquent in his repre- 
sentations concerning fraternal beneficial societies. I quote : 

The Beneficial Societies are Societies of the people. They are born of economy, 
thrift and domestic love; they are the safeguards of the industrious and the honest 
middle classes, and they are protests against the demands of corporations organized 
solely for the purpose of gain, which in their excessive demands debar the man of 
moderate means from making reasonable provisions for his household upon his death. 
He who strikes at them strikes at the spirit of the age. 

They are and always have been honestly administered, and the provisions of this 
law tinder their system it is impossible to comply with. No pretense that it was 
enacted in the interest of their membership will deceive them. They have not asked 
for such a law ; they do not want it. The assessment life insurance companies want 



19 

such a law to injure the beneficial societies. They got it. The people of Missouri 
and of the country want to know why the Insurance Commissioner of that State 
is favoring legislation and corporations which compel the people to pay $3.00 of their 
hard-earned money for life insurance, when under the economies and advantages of 
fraternal societies, which eliminate individual and corporate profit from their system, 
they can make equal provision at a cost of one-third of that sum for their wives 
and children. 

We invite all of the beneficial orders to unite in some common plan to meet the 
emergency. We have no contest with life insurance organizations. We do not belong 
to them in principle or in practice. We do not intend that they shall injure us, or 
wrest a department of State government instituted for the protection of the people 
to their injury. 

The second annual session of the National Fraternal Congress was held in New 
York City in November, 1888. The Committee on Legislation reported that during 
the year 1887-1888 legislation adverse to fraternal societies had been attempted in 
the Dominion of Canada and in the State of Maryland. I quote from the report : 

The attempt of the Insurance Commissioner of Missouri to destroy the Fraternal 
Orders has been foiled as yet by adverse judicial decision, and the near approach of 
the session of the Legislature encourages the hope that the sacred interests which 
are at stake may obtain remedy of the wrong by proper legislation. In the Dominion 

: of Canada a very complex law was submitted at the last session of Parliament. But 
amid its intricacies it was possible to see both the spirit of animosity to the Fra- 
ternal Societies and legislative provisions which would maim and destroy them. 
Through the energy and fidelity of Brother Totten, our Vice-President, assisted by 
officers of other Orders, this legislation was prevented. 

In Maryland the Mutual Cooperative Societies were seized with a horror of 

1 what was called the conduct of the Industrial Insurance organizations, which it is 
charged are societies that collect their dues, generally five cents per week, of members 
at the back gate. So they started to reform them by Act of the Legislature, re- 
quiring a deposit, etc. It was stated in the bill that the Royal Arcanum and the 
other leading Fraternal Societies were excepted from the provisions of the Act. It 
was also stated to prominent members of the Fraternal Societies that there were 
already too many Orders, and it was well to limit their multiplication, and so the 

; exemption in the law was made to include such Fraternal Societies as were organized 
on February t, 1888. The contest was waged with great activity for some time 
between the Cooperative and Industrial Orders, and a bill was finally passed to 
its third reading, which contained the foregoing provisions. Upon inspection it was 
found that this bill, in its apparently innocent provisions, contained an admissson of 

, the right of the Insurance Department to control the Fraternal Orders, and the repeal 

, of a date would confirm that control permanently. Prompt steps were taken, the 
bill withdrawn, amended and passed in accordance with the views of our mem- 
bership. 

The fourth annual session of the National Fraternal Congress was held in Pitts- 
' burgh, November, 1890, and the President in his address used the following lan- 
guage : 

There is another question that I will call to your attention and one that I deem 
of vital importance. How are we to protect ourselves from the many fraudulent 

I organizations that are flooding the country under the garb and cloak of fraternity? 

1 We should carefully consider this question as one of deep importance. While we 
should not do anything to injure in any way any legitimate business or avocation, we 
should expose fraud and counterfeits wherever found and denounce them in no un- 

1 certain terms. Whether or not it would be wise to invoke legislation against such I 

1 am not prepared to say, but something should be done to rid the country of the 
pirates who are robbing the people under the guise of fraternity. 



A bill was drafted in 1888 for the purpose of securing uniform legislation and 
substantially was enacted into law by Massachusetts. This legislation is fully re- 



20 

viewed by the Committee on Legislation at the third session of the National Fra- 
ternal Congress. At the fourth session of the Congress, Honorable John Haskell 
Butler reported that the only legislation that had been enacted in the country was an 
amendment in 1890 to the statute of 1888 by the Legislature of Massachusetts, whereby 
Sections 6, 9, 10, 11 and 12, referred to on page 25 of the proceedings of the Congress 
of the third annual session, were amended as follows : 

Section 8. Any corporation duly organized as aforesaid, which does not employ 
paid agents in soliciting or procuring business other than in the preliminary organiza- 
tion of local branches, and which conducts its business as a fraternal society on the 
lodge system, or limits its certificate holders to a particular order, class or fraternity, 
or to the employees of a particular town or city, designated firm, business house or 
corporation, may provide in its by-laws for the payment, from time to time as re- 
quired, of a fixed sum by each member, and from this income may make weekly or 
other payments to any member during a period of disability of such member, or pay 
a benefit to the member or his family at the end of such period of time as shall be 
fixed by said by-laws and written in the benefit certificate issued to said member; 
provided, that the sum paid as sick benefits to a member may be deducted from the 
total amount to become due at the maturity of the certificate. The money derived 
from assessments as set forth in this section shall be divided into two funds as fol- 
lows : not exceeding 50 per cent shall be set aside as a reserve fund for the exclusive 
payment of matured endowment certificates ; the residue from each assessment shall 
be placed in a benefit fund to be applied exclusively to the payment of disability 
benefits, and no portion of the money received from assessments shall be devoted 
to or used for any other purpose, or carried to any other fund than as herein pro- 
vided. No portion of said securities shall be drawn except upon a requisition signed 
by three-fourths of the Executive Committee, or other officers corresponding thereto, 
and endorsed by the Insurance Commissioner, setting forth that the same is to be 
used for the purposes of the trust ; provided, that any such corporation within a period 
of three months preceding the date of maturity of endowment certificates may make 
any necessary assessments to enable it to meet such obligations, and carry the entire 
amount received upon such assessments to the reserve fund ; provided, further, that 
any such corporation which pays death benefits may make assessments therefor, and 
may hold at any one time, as a death fund belonging to the beneficiaries of anticipated 
deceased members, an amount not exceeding one assessment from a general or un- 
limited membership, or an amount not exceeding in the aggregate one assessment 
from each limited class or division of its members. 

Si-xtion 9. Any corporation organized under or conducting its business in ac- 
cordance with the provisions of this Act, which does not pay a benefit to a member 
or his family at the end of a fixed period of time, may provide in its by-laws for the 
payment, from time to time as required, of a fixed sum by each member, to be paid 
to the beneficiaries of deceased members in such amount and manner as shall be fixed 
by said by-laws. and written in the benefit certificate issued to said member, and pay- 
able to the husband, wife, affianced husband, affiance's wife, relatives of, or persons 
dependent upon, such member. Any such corporation may hold as a death fund 
belonging to the beneficiaries of anticipated deceased members an amount not ex- 
ceeding five assessments from a general or unlimited membership, or an amount not 
exceeding in the aggregate five assessments from each limited class or division of 
its members. Such fund, if not exceeding one assessment as aforesaid, while held in 
trust, shall be invested in securities in which insurance companies are allowed by law 
to invest their capital, or deposited in safe banking institutions subject to sight drafts 
for distribution to the beneficiaries aforesaid. The amount of such fund in excess 
of one assessment shall be deemed an emergency fund and shall be invested in securi- 
ties in which [nsurance Companies arc allowed by law to invest their capital, or not 
exceeding 20 per cent thereof in a building for use and occupancy bv the corporation 
as its home office within this commonwealth; and such securities shall be deposited 
in trust with the Treasurer of the Commonwealth. Such corporation may also provide 
in its by-laws for the payment from time to time of a fixed sum by each member, 
and from the amount thus received mav make weekly or other payments to members 
during a period of disability. This fund shall be used for no other purpose than here- 
in prescribed, and no assessment therefor shall be called while there remains on hand 



21 

of such fund an amount equal to that received from one assessment. No contract 
under this section shall be valid or legal which shall be conditional upon an agree- 
ment or understanding that the beneficiary shall pay the dues and assessments or 
either of them. 

Section io. Any corporation organized under or conducting its business in ac- 
cordance with the provisions of this Act, and which has no per capita tax, may make 
not exceeding three assessments per year to meet its reasonably necessary expenses. 
The purpose of such assessment shall be clearly stated in calls therefor, and no 
assessments shall be called while the amount of one assessment remains on hand. 

Section ii. Fraternal beneficiary corporations, associations or societies organized 
nuder the laws of another State, not transacting in this Commonwealth business as 
herein defined, may continue such business upon the plans heretofore governing them, 
as reported to the Insurance Department, and by otherwise conforming to the pro- 
visions of this Act. 

Section 12. Every corporation doing business under the foregoing provisions 
shall annually, on or before the first day of March in each year, report to the Insur- 
ance Commissioner the location of its principal office, in this Commonwealth, and the 
names and addresses of its President, Secretary and Treasurer, or other officers an- 
swering thereto; and shall make, under oath, such statements of its membership and 
financial tranactions for the year ending on the preceding thirty-first day of Decem- 
ber, with other information relating thereto, as said Commissioner may deem neces- 
sary to a proper exhibit of its business and standing; and the Commissioner may 
at other times require any further sworn statement he may deem necessary relating 
to any such corporation. 

Any fraternal beneficiary organization incorporated under Chapter 429 of the Acts 
of the year 1888, or existing under the laws of this Commonwealth and transacting 
business as defined in said chapter and amendments thereto, may provide in the same 
assessment for its disability and death funds ; provided, that the proportion of the 
assessment to be used for ekher purpose shall be distinctly stated as well as the 
amount received for each fund held and used in the manner provided therefor by law. 

Having in mind the fact that Chairman Butler ranked as one of the leading law- 
yers of Boston, his concluding paragraph is interesting : 

Your committee feels assured, more by reason of signs in the air rather than by 
any definite information on the subject, that the old line insurance companies are 
quietly endeavoring in various States to secure legislation which shall hamper the work 
of the fraternal organizations. Their agents profess, publicly and in private, their 
belief that our associations have been of inestimable benefit to the business of the old 
companies, and that they prefer that they should exist rather than that anything should 
be done to interfere with their work. Nevertheless we cannot avoid the conclusion 
that wherever, without their ostensible action, adverse legislation can be secured, it 
will be quietly done. It therefore is of the utmost importance that fraternal men, 
members of fraternal orders in all the States, should keep a continual and sharp 
watch upon the Legislatures when in session, and have some member favorable to 
our interests whose duty it shall be to inspect every bill bearing upon life insurance 
subjects and taxation, with a view to prevent restricting legislation. It would seem 
as if all which remains for your committee to recommend is that their successors 
shall keep on in the work mapped out for them by the Congress and so far as possible 
protect the interests of the fraternal organizations by watchfulness and advice. 

I have quoted at length from the important provisions of the Massachusetts 
statute, because it was taken as a model form by a number of other States, and 
because it was the first extended legislative enactment concerning Fraternal Bene- 
ficiary Societies. The provision for the payment of endowments and the limitation 
of the amount of funds to the amount of five (Section 8) or one (Section 9) assess- 
ments are noteworthy features. 

The interpretation of the Certificates of Fraternal Beneficiary Societies by the 
Courts usaully is made upon the determination of their legal status and therefore it is 



22 

of the utmost importance that careful study be made of the history of legislation 
On account of the numerous legislative bodies having to do with insurance organiza- 
tions it is not within the limits of space which can be devoted to the subject to 
make a thorough review of laws enacted from year to year. Since 1888 virtually 
was the beginning of State legislation for the regulation and control of these Socie- 
ties, and by 1890 State supervision had become a definite policy, I believe it well to 
give a synopsis as of that year — 1890. 

As stated the sections above quoted were the important provisions in the Massa- 
chusetts statute. Others were as follows : 

First. — That seven or more persons, citizens of that Commonwealth, might form 
a fraternal beneficiary corporation and the manner of the organization is provided for. 

Second. — There is a definition of the nature of the corporation and its operation. 

Third. — Fraternal Beneficiary Associations organized under the laws of another" 
State, but transacting business in Massachusetts, shall report on the request of the 
Commissioner. 

Fourth. — The report is required to be made on or before the 1st of March each 
year, giving amongst other specified information a statement of its membership and 
financial transaction up to December 31, preceding. 

Fifth. — It provides for the appointment of the Insurance Commissioner as the 
attorney upon whom process is to be levied. 

Sixth. — Corporations not then in the State were excluded therefrom. No pro- 
vision is made for their admission. 

There was no general law in Canada for the regulation and supervision of Fra- 
ternal Beneficiary Societies, and the exemption clause to the general insurance Act 
was as follows : 

Neither the consolidated insurance Act (1877) nor this Act shall apply to any 
society or association of persons for fraternal, benevolent, industrial or religious pur- 
poses. ^ Among which purposes shall be the assurance of the lives of members thereof 
exclusively; or to any association for the purpose of life assurance formed in con- 
nection with such society or organization and exclusively from its members, and 
insuring the lives of such members exclusively. 

There were no general statutes for the regulation or supervision of Fraternal Bene- 
ficiary Societies in Alabama, Colorado, Connecticut, Delaware, Georgia, Illinois, In- 
diana, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Ohio, Oregon, 
Pennsylvania, Rhode Island, Texas, Virginia and West Virginia. As in Canada there 
were exemption clauses to the general insurance laws, and I quote that for Illinois as 
a representative provision for the States named: 

Provided, that nothing herein contained shall be held to apply to any organization 
oi a truly social, religious or benevolent character, where no commissions are paid 
and no salaried officers or agents are employed, nor to any local association or society 
organized under or subject to the control of a Grand or Supreme body, nor to any 
secret organization having subordinate lodges or councils which has been organized 
under the laws of this or any other State, and which is now permitted to do business 
in this State. 

1 here were no laws concerning Fraternal Beneficiary Societies in the States of 
California, Dakota, District of Columbia, Mississippi, Nevada, New Hampshire, New 
Jersey, Xew Mc\ic«», North Carolina, Tennessee, Utah, Washington and Wyoming. 
There was in 1890 a law pending in Xew Hampshire. 

In Florida, South Carolina, Vermont and Montana, there were no laws, exemption 



23 

or otherwise, relating to fraternal societies, but there had been department ruling- 
making the general insurance laws applicable to fratcrnals. 

In Maine, Massachusetts, Nebraska, New York and Wisconsin there were special 
laws concerning Fraternal Beneficiary Societies. The Maine law was similar to that 
in Massachusetts heretofore quoted. 

The Maine law of 1890 defines the business of Fraternal Beneficiary Associations 
as follows : 

Any corporation duly organized as aforesaid, and which does not employ paid 
agents in soliciting and procuring business, other than in the preliminary organiza- 
tion of local branches, and which conducts its business as a fraternal society, on the 
lodge system, or limits its certificate holders to a particular order, class or fraternity, 
or to the employees of a particular town or city, designated firm, business house, or 
corporation, may provide in its by-laws for the payment from time to time, of a 
fixed sum by each member, and from this income may make weekly or other payments 
to each member during the period of disability of such member. Such corporation 
may also provide in its by-laws for the payment from time to time of a fixed sum 
by each member, to be paid to the beneficiaries of deceased members in such amount 
and manner as shall be fixed by said by-laws and written in the benefit certificate 
issued to such member, and payable to the husband, wife, children, relatives of, or 
persons dependent upon such member; but no contract under this Act shall be valid 
or legal which shall be conditional upon an agreement or understanding that the 
beneficiary shall pay the dues and assessments, or either of them, for said member. 

It also provides that Masonic and Odd Fellows' Associations within the State may 
employ paid agents in soliciting business, said agents to be licensed by the Insurance 
Commissioner; provides that such corporation may hold as a death fund an amount 
not exceeding one assessment; provides that the fraternal beneficiary corporations, 
associations or societies, organized under the laws of another State, and now transact- 
ing business as herein defined in this State, and which now report, or which shall 
report when requested, to the Insurance Department, may continue such business 
without incorporating under this Act. Fraternal beneficiary corporations or societies, 
not now transacting business in this State, which may hereafter desire to do so, must 
first obtain a license therefor from the Insurance Commissioner, and shall furnish 
him a copy of its by-laws, with a statement showing its membership and financial 
condition, and such other information as he deems necessary. It requires each 
society or association to report annually on or before the first day of April (March, 
in Massachusetts) to the Insurance Commissioner the names and addresses of its 
President, Secretary and Treasurer, and shall make such further statements of its 
membership and financial transactions for the year ending the 31st day of December, 
as may be necessary, for the proper exhibit of its business and standing; provides 
for the punishment of any person who assists in procuring membership in any society 
not doing business as authorized in this Act. It is provided that the benefit shall not 
be liable to trustee or garnishee process, and shall not be taken or appropriated for 
any debt of the certificate holder or beneficiary. 

The general insurance statute of Maine, regulating business and assessment in- 
surance associations, provides "that nothing herein contained shall be construed as 
applicable to organizations which conduct their business as fraternal societies on the 
lodge system." 

The New York law defines Fraternal Orders as follows : 

First. — Section 6. All Beneficiary Societies, Orders or Associations, whether volun- 
tary or incorporated under the laws of this State, or any other State or Territory 
of the United States or of the District of Columbia, the members of which are com- 
posed, elected and initiated in subordinate lodges or councils or other bodies, by 



24 

whatsoever other name known, according to the constitution, laws, rules, regulations, 
rites and ceremonies of such societies, orders or associations respectively, now exist-Jj 
ing in this State or which may be hereafter instituted or organized in this State, or 
authorized to do business in this State, are hereby declared to be mutual benefit 
fraternities, and exempt from the provisions of the insurance laws of this State, and 
shall be subject only to the provisions of this Act. 

Second. — It further provides that any number of persons, not less than nine resi- 
dents of the State of New York, desiring to form a Fraternal Beneficiary Society, 
Order or Association for the relief of members or beneficiaries, shall file in the office 
of the Superintendent of the Insurance Department a declaration signed by each of 
the corporators, setting forth its name, mode of operation and names of officers, 
and upon certificate of the Attorney General, that the law has been complied with, 
and upon the Insurance Commissioner being satisfied that there are 200 subscribers 
whose benefits aggregate $400,000, and that one assessment amounting to ; at least, 
1 per cent thereof has been paid in full in cash, then he shall issue his certificate and 
license authorizing the. society to transact its affairs. 






Third. — It provides for the reincorporation of orders already existing, and that 
no foreign corporation shall do business in the State until it has filed the certificate 
as above, and the Insurance Commissioner may revoke the certificate when the mem- 
bership falls below 200 with representing benefits aggregating $400,000. 

Fourth. — The Society shall have power to make its own Constitution and Laws, 
not inconsistent with the Constitution and Laws of New York State, or of the United 
States. 

Fifth. — Section 8. Such Fraternal Beneficiary Societies, Orders or Associations, 
may make such promise or agreement with their members for the payment of benefits 
to a member, or others dependent upon him, or beneficiary designated by him, as 
may be provided by the Constitution, Laws, Rules and Regulations of such Fraternal 
Beneficiary Societies, Orders or Associations respectively, subject to a compliance 
therewith by the member, provided that no such Fraternal Beneficiary Society, Order 
or Association shall issue any certificate or make any promise or agreement, express 
or implied, for the payment of any greater sum of money than one assessment upon 
all its members will realize, at the time of issuing such certificate or making such 
promise or agreement. 

Sixth. — Section 9. Such Fraternal Societies, Orders or Associations may derive 
such money or such benefit, charity, relief or aid fund from voluntary donations, or 
from admission fees, dues and assessments collected, or to be collected from mem- 
bers thereof, in manner and form as may be provided by the Constitution, Laws, 
Rules and Regulations of such Societies, Orders or Associations respectively, but no 
such Society or Officer thereof shall use any money collected or received for the 
payment of beneficiary claims, for any other purpose. 

Seventh. — It provides also that all such Societies, Orders or Associations, together 
with their books, papers and vouchers, shall be subject to visitation and inspection 
by the Superintendent of the Insurance Deparemtnt, or such person or persons as he 
may at any time designate. Any such Society, Order or Association refusing or neglect- 
ing to make Mich report may, upon the suit of said Superintendent, be enjoined by 
the Supreme Court from carrying on any business until such report shall be made, 
and until the costs of such action be paid. Said Superintendent must, within thirty 
day. after failure to make such report, or in case any such Society, Order or Asso- 
ciation shall exceed its powers or shall conduct its business fraudulently, or to com- 
ply with any of the provisions of this Act, give notice in writing to the Attorney- 
general, who must immediately commence an action against the Society so failing. 
The annual report to the Superintendent of Insurance shall be in lieu of all other 
reports required by any other law. 

Eighth.— Each notice of assessment shall set forth truly the purpose of such 
ssment, and what portion or amounl thereof, if any, is to he used for the pay- 
ment of other than beneficiary claims. 

Ninth. — Benefits shall not he subject to garnishment. 



25 

Tenth. — Any officer, member, agent, solicitor or examining physician of said 
Society, or any other person who shall knowingly or willfully make any false or 
fraudulent statement or representation in or with reference to any documentary or 
other proof for the purpose of obtaining membership in or benefit from any such 
Society, Order or Association, for himself or any other person, shall be guilty of a 
misdemeanor. 

Eleventh. — Existing Fraternal Societies are made subject to the provisions of this 
Act, except in its provisions for incorporation and the filing of the certificate, as a 
condition precedent to beginning operation. 

Twelfth. — Nothing in this Act shall be construed to apply to any Corporation, 
Society or Association carrying on the business of life, health, casualty or accident in- 
surance for the profit or gain, and shall only apply to Fraternal Beneficiary Societies, 
Orders or Associations, as defined by Section 6. 

Thirteenth. — Independent Order of Odd Fellows, Free and Accepted Masons and 
Knights of Pythias, exculsive of the endowment rank, excepted. 

The Law of Wisconsin, as approved April 9, 1889, requires a report similar to 
that of Massachusetts, to be made, and provides for the appointment of the Insurance 
Commissioner as attorney, upon whom process against the corporations shall be 
served. In other respects the Fraternal Societies are not subject to insurance legis- 
lation. 

The Nebraska statute provides : 

Any secret society or association, the management and control of which is con- 
fined to the membership of any secret society or order, heretofore organized, or 
I which may hereafter be organized, which in addition to the benevolent and fraternal 
features thereof, shall also issue certificates of indemnity calling for the payment of a 
( certain sum, known and defined, in case of the death, disability or sickness of any of 
its members, to the wife, widow, orphan or orphans, or other person dependent 
upon such members, shall be exempt from the provisions of the law relating to life 
insurance companies. Provided, that such secret society or association as aforesaid 
shall comply with all the requirements of this Act. 

Within thirty days after the taking effect of this Act such society as aforesaid 
shall, by its presiding officer or recording officer, or both of them, file a certificate in 
the office of the Auditor of Public Accounts, setting forth the total number of mem- 
bers in good standing in such Society or Association at the date of the taking effect 
of this Act, the name, title and postoffice address of each of the chief officers of such 
Societies or Associations, the plan of assessments upon which funds are provided to 
pay the certificate of indemnity issued by such Society or Association, together with 
a certified copy of the constitution and by-laws of such Society. If, from such state- 
ments, the Auditor of Public Accounts shall be satisfied that such Society or Associa- 
tion has a sufficient membership to pay a certificate so issued by such Society or 
Association in case of the death of any of its members by its usual method of assess- 
\ ment, he shall issue to such Society or Association a certificate authorizing it to 
tranact its business for one year. 

It then provides for annual reports, which requirement is repealed by the Act of 
1889. It further enacts that if at any time the Auditor shall be credibly informed 
that the membership has fallen below the number sufficient to pay the indemnity, he 
shall investigate the matter, and, if proven, shall withdraw the certificate. 

Before any change in the constitution and by-laws of any such society or corpora- 
tion shall take effect, a copy of the same shall be filed in the office of the Auditor of 
Public Accounts. 

Money collected for the payment of certificates of indemnity shall be used for no 
other purpose. 

Any person or persons violating the provisions of this Act shall, upon conviction 
f thereof, be imprisoned in the penitentiary for not more than five nor less than one 
year. 

Any officer embezzling or appropriating any of the funds of any such Society to 
his own use shall be guilty of embezzlement, and upon conviction thereof be punished 
accordingly. 



26 

The Committee on Legislation, in its report to the National Fraternal Congress, 
referring to the Nebraska and Massachusetts statutes, used the following strong lan- 
guage : 

This (Nebraska law) is the most iniquitous Act upon the statute book. The re- 
quirement that the certificate must be filed within thirty days after the passage of the 
Act is evidently intended to ensnare the Orders who in that brief period may never 
have heard of the law, and it practically excludes all new organizations from doing 
business in the State. 

The proviso that the changes in the laws shall not take effect until a copy has 
been filed in the Auditor's office is the sublimity of impudence, of arbitrariness and 
injustice. 

Attention is especially called to this law that its provisions may be modified in the 
interest of fairness, and if the Insurance Department of the State is responsible for 
its enactment, that department should at once be attacked by the Fraternal Orders, 
as partisan and tyrannical. 

The law of Massachusetts gives too much power to one man. It practically ex- 
cludes all new orders from entering the State, and in this nineteenth century has 
built a Chinese wall around the old Commonwealth, and secure behind it, as he thinks, 
the Insurance Commissioner, interpreting the law, says the words "report when re- 
quested," mean that if I do not request them they cannot "report when requested," 
and cannot come in under the law. That is to say, that the status of every Fraternal 
Order in the State of Massachusetts depends upon the judgment and whim of the 
Insurance Commissioner, uncontrolled by, or rather supported by law, whether he will 
ask it to report or not. This extraordinary interpretation should be looked into and 
an adverse decision had or the law repealed. No presumed benefit can justify the 
conference of such power on any man in these days. 

The committee, answering the question, Is Legislation Needed? delivered itself 
as follows : 

An analysis of the special laws relating to the Fraternal Societies, which are on 
the statute books, show us : 

1 hat in Nebraska the intention of the legislation was plainly to cripple and drive 
the Fraternal Orders from the State. 

The Missouri law simply relates to the annual reports, while the laws of Massa- 
chusetts, Maine and New York include this feature, and declare the mode of incor- 
poration, with some limitations intended to provide for the protection of members. 
The distinction between the Fraternal Orders and the mutual assessment companies 
is maintained in these statutes, and this is right, but beyond the provisions for their 
incorporation, based upon their essential and distinctive features and principles, it is 
questionable whether the other provision of those Acts are of any practical utility. 

What are these provisions intended to protect the membership? 

First. — Annual report, Massachusetts, New York, Maine and Wisconsin law. 

Second. — Any solicitor, agent or examining physician, knowing or willfully making 
any false or fraudulent statement or representation, in or with reference to any appli- 
cation for membership, or for the purpose of obtaining any money or benefit in any 
corporation, etc., shall be guilty of a misdemeanor (Maine, Massachusetts and New 
York laws). And making it perjury for any person to make a false statement of a 
material fact under oath in death proofs. (Massachusetts law.) 

Third. — No S hall promise to pay more than one assessment will yield. 

(New York law.) 

Fourth. — The assessment notice shall state specifically its object and what propor- 
tion is to be used for other than beneficiary claims. (New York law.) 

Fifth. — Defining what constitute beneficiary societies. (New York, Maine and 
Massachusetts law.) 

Sixth. — Declaring misappropriation of funds embezzlement. (Nebraska law.) 

Seventh. — Funds not subject to garnishment. 



27 

The provision in relation to embezzlement is believed to be covered by the crimi- 
nal law of all the States. 

The especial features of this legislation are prompted by what might occur rather 
than what the experience of the Orders necessitates, but they are not in any way de- 
pendent upon the supervision by the Insurance Departments, which is ingeniously in- 
troduced into the Acts. Some of them, notably that relating to garnishment, were 
included in the old statutes, and it is believed that this provision is the only one that 
has been of any practical benefit. 

The losses of the Orders from the offenses described as constituting misdemeanor 
and perjury are hardly worthy of mention, and are largely and best provided for by 
the vigilance and activity of the members. 

That a Society shall pay more than one assessment will yield, seems rather a 
matter for the members than for the paternal (sic) Commonwealth. 

The assessment notices, so far as we are aware, specify distinctly the object of the 
call. 

The definition of a Fraternal Order is an important one, and the distinction 
between them and Life Insurance Companies of any description should be fully set 
forth in all legislation likely to affect them. 

It is a very remarkable fact that all the legislation on the statute books relating to 
the Fraternal Societies originated with the Life Insurance Companies, or with the 
Insurance Departments of the States. It has not come from the members of the 
Orders or their officers. It is true that some officers of the Fraternal Societies, 
thinking that an annual report could do no harm and might do good in showing the 
condition of the several Orders at the time it is made, did not seriously object thereto, 
but the necessity or right of State supervision of the Fraternal Orders, it is believed, 
has not been admitted by any one authorized to speak for them. 

The reason for this is obvious. A life Insurance Company is a close corporation. 
Its insured can have no knowledge of its affairs except as it chooses to exhibit them. 
A Fraternal Order has an argus eye in each of its members, prying into its affairs. 
Each one is an integral part of the whole, and its workings in all their details are 
exhibited in the council room, in the Grand and in the Supreme Councils, to a body 
jealous of its prerogatives and too large to enter into any combination for wrong- 
doing. 

In all the machinery necessary to protect members against fraudulent applica- 
tions, death claims and misappropriations of funds, the customary provisions of the 
constitutions and laws of the Orders have proved sufficient, backed as they are by the 
ordinary criminal laws in the several States. 

The submission of the Fraternal Orders to the control of the Insurance Depart- 
ment of any of the States is wrong in principle, and of no benefit to the members of 
the Orders in practice. The reports are buried and are of as much general use 
as the census statistics, while the annual reports of the Supreme authorities of the 
Orders are published for general inspection, and can be obtained, if necessary, by 
any one. 

The assessment notice is the warning voice to the member, bidding him to inquire 
into the Society's affairs, and it is the only notice that the member ever heeds. 

It is wrong in principle, because the distinction is marked and wide between 
the Fraternal Orders and the Insurance Companies of all kinds. The one is organ- 
ized with a view to business profit solely. The other is constituted for benevolent pur- 
poses, with the death benefit as an incident to its benevolent features. The whole 
motive of operation and the objects of the Insurance Companies are widely divergent 
from the Fraternal Orders. And with this marked distinction, it is a wrong upon 
them to break down this barrier, and subject them to the control of a department, 
organized from an insurance standpoint and in every case where special legislation has 
been had, may be depended upon to look at affairs through insurance spectacles. 

The Orders today are as honestly conducted in the States where they are exempt 
from any control as in those States where the insurance authorities have assumed 
to superintend them. The long array of those States shows that there is no neces- 
sity for special legislation. The constitutions of the Orders, and the vigilance of the 
membership with the ordinary criminal statutes relating to frauds and misdemeanors, 
have proved a sufficient protection. And the very few instances where offenses have 
occurred have found the remedy ready and sufficient and do not justify the sub- 
jection of the Fraternal Orders to the alien institution of the Insurance Department. 
These remarks are only intended to include the legislation promoted by those In- 



28 

surance Commissioners who have sought to aggrandize their offices at the expense 
of the Fraternal Orders, and do not include the honorable and intelligent officials 
who appreciate the Fraternal Orders, and the distinction between them and the money- 
making corporations, and who recognize the fact that they are not intelligently sub- 
ject to their departments. 

Your committee are therefore of the opinion that no legislation subjecting the 
Fraternal Orders to State control in any may should be permitted to be enacted. In 
cases where legislation has already been had, it should be repealed, or a new depart- 
ment, to be called the "Department of the Fraternal Orders," should be created and 
substituted for the Insurance Department. And the law should provide that the 
incumbent of said office shall be a member of one of the Fraternal Orders. No man 
who is not a member of the Benevolent Societies can comprehend, do justice to, or 
should in any manner be permitted to control the economy of these institutions. That 
in all legislation relating to Insurance Companies, which by plain expression or by 
ingenious and subtle wording, might affect such Orders, a clause should be added 
expressly excluding them from its operation. That the experience of the large ma- 
jority of the States shows that no legislation is necessary to protect the members 
of the Orders from their management, but that everywhere the most intelligent and 
active interest is necessary to protect the Orders from legislation promoted by the 
Insurance Companies. 

Whenever in any State it is advisable to have a special law for the incorpora- 
tion of the Fraternal Orders, your Committee believe that the New York law is less 
liable to objection than the others, omitting Section 10, which relates to Supervision 
by the Insurance Deparament; amending Sections 2, 3 and 4, so that the application 
for charter or re-incorporation shall not be made to the Insurance Department, but 
the certificate shall be filed and the license or charter issued, as is provided for cor- 
porations, under the general Incorporation Law of the respective States ; and that 
the certificate of foreign corporations, provided for in Section 5, shall be filed with 
the Secretary of State, who shall be substituted for the Insurance Department, or 
Superintendent of Insurance Department, in said section. 

Your Committee therefore recommend the adoption of the following resolutions : 

Resolved, 1. That the Fraternal Societies be exempted from the provisions of all 
laws relating to insurance companies, regular or cooperative. 

Resolved, 2. That no legislation is needed, unless possibly in some isolated cases, 
where experience has shown it is advisable to protect the fraternal beneficial orders 
from Societies not properly fraternal, in States where the distinction is not drawn by 
present legisation ; and this can best be done by a simple clause of exemption. 

Resolved, 3. If deemed advisable, under peculiar circumstances, in certain States, 
the New York law should be used ; so amended that the certificate should be filed and 
the charter or license issued in the manner provided in the general Incorporation 
Laws of the several States; that no report shall be made to the Insurance Com- 
missioner, but that a new department, to be called the Department of the Fraternal 
Orders, shall be created in every State where supervision or control of the Fraternal 
Orders shall for any cause be permitted. 

The report of the Committee was unanimously adopted and its resolutions sup- 
ported without dissent. The members of the Committee were leaders and the dele- 
gates to the Congress were the officials— and many of them the founders — of the most 
important Societies in the United States and Canada. Amongst them were Boynton, 
Sackett, Nelson, Miller, Harvey, Craig, Hall, Stevens, Savage, Warnock, Shedd, Acker, 
Shepherd, Irving, Brown, Robson, Wright, Seaver, Shields and Pratt; while on the 
Committee on Legislation were John Haskell Butler, W. Warne Wilson, John Mulli- 
gan, S. A. Will, John Otto, John T. Milburn and M. G. Jeffries. 

Should not such men be held as true interpreters of the purpose and character of 
Fraternal Beneficiary Societies? 

We have these men standing as a solid body against legislative regulation and 
departmental supervision, and, excepting live States their view is accepted (in 1890) 
by State Legislatures and Insurance Commissioners. The previous effort to secure 



29 

a modicum of legislative control in Missouri had been "foiled" by Court interpretation 
and decision. 

We have these men, twenty years after the A. O. U. W. began business, unanimously 
declaring that the Fraternal Beneficiary Societies "are constituted for benevolent 
purposes, with the death benefit as an incident to its benevolent features." 

We hear them declaring that "no legislation subjecting the Fraternal Orders to 
State control, in any way, should be permitted" unless in "isolated cases," and then 
"this can best be done by a simple clause of exemption." 

Commissioner Wilson, of the Internal Revenue Department, and Justices of the 
Supreme Courts of Pennsylvania, Missouri and Illinois had good authority to support 
their rulings ! Protesting members can quote the fathers to sustain their conten- 
tions ! 

This history should reflect the spirit of the times as it progresses, and to that end 
I quote from the address of President A. R. Savage, at the fifth annual session of 
the Congress, held in Washington, D. C, November 10, 1891 : 

I do not know that history records any instance of so marvelous a development of 
a charitable, or human, or social principle, so far-reaching in its effects, as that em- 
bodied in the constitutions of the Fraternal Orders. Citizens divided in interests, 
separated by locality, of every tenet in religion, and every shade of political convic- 
tion, unknown to each other when enlisted under the white banner of charity, and 
drawn to each other by the bonds of fraternity, become brothers in spirit and in deed, 
giving of their substance, as well as of their sympathy, to those upon whom want has 
fallen, and upon whose pathway the shadow of misfortune is resting. 

We began in darkenss, but evermore our paths have been tending toward the 
light. We began in ignorance; we have learned wisdom by sharp and profitable expe- 
rience. We had no place either upon statute book or in the decisions of the courts. 
Xo more had we any recognized position among the varied social forces which sur- 
round and control mankind. Courts looked upon us with disparagement ; Legislatures 
with suspicion, and society, as the latest Utopian experiment devised by idealists, per- 
chance to live, and living to die, marking one more of the failures of enthusiastic and 
unwise men whose hearts felt more grandly than their eyes were permitted to see 
wisely. But by patience and intelligence, and steadfastly continuing in good works, 
all this has been changed. 

Today, after a little more than twenty-five years, at least one in forty of all the 
population of our country, including men, women and children, are members of some 
one or more of these societies, and at least one in ten are their beneficiaries. Should 
one ask me whether such a plan, built upon such a foundation, was liable to endure, 
my first answer would be, "nothing in this generation can fail which meets so per- 
fectly the common wants of a common people." This is not the time for a discussion 
of the theory of fratenal beneficence. That we have assembled here in this Con- 
gress is the evidence and proof of our convictions. Before us is the problem, "How 
may we best improve, amend and modify the details of our work and put into prac- 
tical shape and operation, the lessons learned in the school of experience?" Each year 
brings new lessons by which we may profit. We are just beginning to turn the light 
of philosophy upon our plans, and to tabulate, to analyze and compare. Vital sta- 
tistics are gradually becoming more and more important to us, and we are learning 
to rely less upon wild, impetuous, unregulated impulse, either for sustaining existence 
or promoting growth, and more upon mthodic philosophical and wisely directed efforts. 

We come into sharp competition with the "old line" insurance companies. We 
come into competition with the open assessment associations, which have taken in part 
our form, but have left our substance. We come into competition with Orders which 
claim to be allied to us, but have neither our form nor our substance. But our field 
is peculiarly our own, never to be successfully invaded by any competitor, so long as 
the warfare we wage is only for the widow and the orphan, and not to promote selfish, 
temporal interests. Let benevolence, and not gain, be our cornerstone, and our build- 
ing shall stand immortal, eternal. I believe we can in no way so well do ourselves 
and our Societies the most good, as by declaring in the most emphatic manner our 
belief in the old "land marks." Let us stand steadfast where this Congress has always 



30 

stood, extending the right hand of fellowship to those who build upon such foundation 
as we have built upon. The most exalted form of fraternal benevolence is that exem- 
plified by men who gather round a common altar and take upon themselves a sacred 
vow to be faithful unto death to the loved ones, to care for the widow, to lift up the 
orphan, and relieve the sick and. the distressed, and never to make even the form of 
fraternity a pretense for personal gain. 

I also congratulate you upon the fact that, after these many years, merit and not 
cheapness is becoming the criterion of excellence by which Fraternal Societies are 
judged. 

I think this Congress should adopt some more systematic and efficient method of 
making its influence felt in legislative halls, when legislation, either favorable or ad- 
verse, is under consideration. Notably, in two or three States this last year, dangerous, 
if not hostile, laws have been enacted which might have been defeated by concerted 
action. We cannot be too vigilant. There s'hould be a sentinel upon every outpost, 
and the entire army, when it sleeps, should sleep upon its arms. 

Surely the voice of a million and a half of men and women, uttered with force 
and authority, cannot fail to be heard and heeded by the most obdurate of legislators. 

It was noted that the Massachusetts law permitted the payment of endowments by 
Fraternal Societies. In 1891 began the agitation that resulted in the elimination of 
such permission from the laws of all the States, excepting the payment of a stated 
sum as an old-age benefit at age 70. I quote from the proceedings of the Congress : 

The President: There being no reports of committees ready to be presented at 
the present time, the Congress will take up the next matter on the program, to-wit: 
Subject No. 8, discussion of subject, "Can a Fraternal Society safely transact an en- 
dowment business and pay a stated sum at the end of a stated number of years, 
or sooner in the event of death?" Upon that subject James E. Shepherd has pre- 
pared a paper which the Congress will not listen to: (The concluding paragraphs ar* 
given.) 

Now, what did the founders of the Fraternal Orders start out to do — merely this 
and nothing more : 

To protect the widow and the orphan. In fact, today the benefit fund of one of 
the oldest and largest Orders is officially known as the "Widows arid Orphans' Benefit 
Fund." Then no man sought any direct personal gain, and the proof of this is that 
in many of the older Orders only men were admitted to membership, and I call to 
mind but one Order, organized as far back as 1876, that admitted women to mem- 
bership. By thus shutting out the wife from membership, he practically could be 
the beneficiary of no one — his action was free from all else than protection to those 
dependent on him; it was utterly without selfishness, and justly and fairly stated he 
was one of a brotherhood that formed and established a fraternity so beneficent, un- 
selfish and single-minded, that it was a practical embodiment and application of the 
theory of the golden rule. 

So patent was this to the honest observer that from very general distrust and un- 
belief came a change to almost universal commendation. Hon. John K. Tarbox, in 
1887, in his annual report to the General Court of Massachusetts, speaking of these 
Societies, officially endorsed them, saying: "The fit word is one of cordial commen- 
dation, aside from the gracious benefits they disburse through their insurance plan; 
they unite the people in sympathetic association and foster a worthy social spirit." 

Under no other plan could these Orders have won the place they hold in the world's 
regard. Under it came their phenomenal growth and consequent ability to do an 
unmeasured and almost unmeasurable good. 

And now, having briefly set forth the plan of each, T submit my conclusions: 

A Fraternal Order cannot safely sell endowments, because — 

First.— The plans of the Fraternal Orders and a company selling endowments are 
dissimilar and irreconcilable. 

Second. — An endowment is purely banking and not insurance of any kind. 

Third. — Speculation enters into endowments. Tt is foreign to, and would be fatal 
to, the fraternal plan. 

Fourth. — Fraternal assessment insurance is still in its experimental stage, and there 
is danger and unwisdom in adding any foreign matter until time shall fully develop 



31 

the proper course to remedy and permanently overcome the undesirable things that 
each year develops to him who does not shut his eyes to the disagreeable. 

D. E. Stevens also presented a paper on subject Xo. 8, and following are ex- 
cerpts : 

Can a Fraternal Society safely transact an endowment business, and pay a stated 
sum at the end of a stated number of years, or sooner in the event of death? 

Life Insurance is indemnity against financial loss by death, and should be based 
upon the present or prospective productiveness of the person insured. 

Endowment Insurance is Term Insurance combined with a compound interest in- 
vestment. 

Tabor, in his "Three Systems," says : "A healthy body, a strong will, an active 
brain, and a natural aptness for business, are the most productive property in the 
world. It has been said that when time was young, only two human beings lived 
on this earth. They lived in a garden, and fig leaves were their clothing. There 
were no business blocks, no railroads, no banks, no palatial residences, no trade, no 
commerce, no money, no art, no science, no culture, no material wealth. All of these 
have since been produced by the brain of man. One generation after another has 
lived and passed away, each contributing something to what now constitutes the 
wealth of the world ! One hundred years hence every man, woman and child now 
living will be dead. The exceptions only prove the rule. Man, truly, is very produc- 
tive, and there is nothing more certain than that he will die." 

While under the former conditions there was no such thing as Life Insurance, 
nor need of it, yet one can readily see how the present condition of things makes 
necessary Life Insurance. 

Endowment Insurance differs quite widely from Life Insurance in many respects. 
If we take it for granted that the question means, is it safe from a financial or mathe- 
matical standpoint for such a Society to transact an endowment business, if the Society 
be building and equipped with the necessary machinery needful thereto, we answer, 
Yes. 

In answering the first phase of this question in the affirmative, I could do so only 
upon condition that with the seeming mystery the explanation also go. I think there 
can be no question as to there being a safe method of conducting an Endowment 
business. It may be expensive, but it can be made safe, provided the funds are honestly 
held and faithfully invested by those having them in charge. 

To say that as the end of the term of years in which the first Endowments are to 
mature draws near, that by the extra heavy sums which will be required, a large 
number of the members will be compelled to lapse their membership, thus swelling the 
profits of those who remain, is a proposition so uncertain and so at variance with 
equity, business prudence and the milk of human kindness, that I can scarcely think 
that any organization would found calculations thereon, much less seriously consider 
them safe. 

Now, without wearying your patience by going into a calculation in further detail, 
I submit that such a proposition is not (in my judgment) a safe one, unless some 
alchemist or magician is called upon to assist in the attainment of the promised end. 

As many of these so-called Societies pay a mere pittance at death of a member 
who dies before the end of the Endowment term, their business would more properly 
be called Tontine Insurance. 

Now, there are longer term endowments, which present something more practical, 
but which, of course, must include a fund sufficient, with accretions from interests and 
profit from lapsing, to amount to the face of the certificate by the end of the endowment 
period. The advantage gained in a longer term comes from the fact that these factors 
have a so much wider field in which to operate, and therefore come to the assistance 
of the member in a much greater degree than is possible under the short term method. 
To fix the endowment period at or about the end of probable life is the most favorable 
plan possible for anything of an endowment nature, for thus, only the veterans who 
have faithfully and loyally stood by the organization reap a reward, and themselves, 
in old age, reap it instead of further on, having others benefit by receiving it. In even 
this class of endowment it must be remembered in the calculation, and we must not 
lose sight of the fact that they are going to cost more than life insurance payments, 
and should, therefore, be charged at a different rate. 



32 

Now, turning from this phase of the question to that other phase of it, which I 
cannot feel justified in ignoring in this paper, namely: Can a Fraternal Society safely 
conduct an endowment business, I am clearly of the opinion that the Fraternal Organi- 
zation which would keep in spirit and in letter the meaning of the word "Fraternal" 
in its best sense, cannot safely or otherwise conduct an endowment business, in the 
usual acceptance of that term. The word "Fraternity" is derived from "Frater," 
brother, and the word "Fraternity" is defined as a body of men associated for their 
common interest, business or pleasure — a brotherhood. Hence, where the interest of 
each lies in the misfortune of the other, or his benefits are to be derived from the 
failure of his brother in his efforts to do his share, there seems to be something an- 
tagonistic to the true spirit of fraternity. 

On this subject discussion occurred as follows: 

J. A. Hinsey : 

I do not think that Fraternal Societies can transact a perfectly safe Endowment 
business unless the rates, rules and practice of old-line insurance companies are 
adopted and followed. What is commonly called Endowment Insurance as carried 
on by the regular companies is certainly not Life Insurance, except that an agreement 
is made to pay the stipulated sum before maturity in case of death. Investment for 
the purpose of accumulating money is probably the only term that can be applied to 
this feature. The same may be said of the numerous building and loan association 
schemes. 

A Society that attaches to its insurance this feature and derives the funds with 
which to meet matured obligations by assessing the membership must ultimately prove 
insolvent. It will then be seen that the moneys paid by a number of members have 
been absorbed by a few. We must therefore assume that when the next policies or 
another set of certificates mature the increased number and the funds required to 
cancel them will be correspondingly heavy. 

Mr. Jeffries. 

I do not wish to say anything on the subject, but I understand that there are now 
in this body members of an association that are, virtually, paying or promising to pay 
Endowments. Now, I would like to hear the justification from those Societies for 
that line of action. I understand Brother Boynton is the champion of that line of 
insurance, and I would like to hear, for one, what he has got to say on the subject. 
I would like to hear an explanation of their plan, or their proposed plan, rates, etc., 
because it may very materially affect the membership of this Association. There are 
other Societies promising the same thing, and if it can be done, we ought to know 
it, and we ought to hear the other side. I would like to hear from Brother Boynton, 
or some other representative of some of the Associations that do, or attempt to 
transact, that line of business. 

Mr. H. H. Morse: 

If we could go back twenty-five years we would find that there have been a great 
many things in connection with Life Insurance that, from our standpoint, have been 
re-written, and if this question had been propounded to the Fraternal Societies that 
existed twenty-live years ago, "Can a Fraternal Society safely pay a death benefit?" 
the probabilities arc that there would have been as many and as able papers read 
to the contrary as have been read upon this subject here today. But in regard to the 
main proposition as contained in this question, our friend and brother, Mr. Stevens, 
who read an able paper a few minutes ago, concisely answered the question. Of 
course it can be done if a sufficient amount is collected for that purpose. Whether a 
Fraternal Society should engage in any such undertaking is a mere matter of judg- 
ment. There are Fraternal Societies of one kind and there are Fraternal Societies of 
another kind. Fraternal Societies are forming every day, and it does not behoove us 
to pass judgment in regard to them. It does not devolve upon us to criticize them. 
If we do not like the kind of Fraternal Societies that are being organized for the 
purpose of paying endowment benefits, leave them alone. 

It may be that some propositions are ridiculous and foolish. In considering this 
question we must look at it in the light of putting ourselves in the place of those who 
are members of these organizations and who believe that results will be beneficial 



33 

to them from the management of the Association to which they belong. Some of 
them may be fraudulent, some of them may be vicious, some of them may be of a 
different character, but the question I want to deal with particularly is the question 
as to the payment of a disability benefit or an old age benefit, as it is paid in such 
reputable organizations as the Knights of Maccabees, the Chosen Friends, and other 
institutions that have existed in this country for the past ten or twelve years and are 
successful in carrying on their Fraternal work. There is no reason in the world why 
we cannot successfully treat a fixed period of life as a maturity of certificate pro- 
viding we put that period so far in advance as to render all questions as to its being 
a proper period of time. If a man has lived out the allotted time of three score years 
and ten, if a man has passed beyond the age of his expectancy, if he contributed from 
time to time as required for the fund necessary to create and pay the benefits that he 
is to enjoy, there is no reason why, by the very table that you rely upon for the 
payment of a simple death benefit, that the same result cannot be reached for the 
payment of a maturity certificate at 70 or 75 years. 

Mr. Hall: 

I have only a few words to say. There is one question that has not been touched 
upon — the question of endowment or long period payments — which I think is of interest 
for us all to consider. Most of these Fraternities who pay a benefit to members at 
the expectancy, pay but half of the amount of insurance, and the other half remains 
to be paid as a death benefit. The value which is paid at the time^ of expiration or 
on arriving at the age of expectancy is paid in by the member during the time that 
he has been a member of the Association, an'd he continues to pay his assessment until 
the time of death, so that it does not appear to me that there is an Endowment 
feature, such as we call the Endowment feature when we speak of it in relation to 
those short period Endowments. 

Mr. Boynton : 

The great trouble with the speakers who have preceded me is that they are 
tinctured badly with old line life insurance ideas. I hold that the feature which 
has been discussed here today as appertaining to the Chosen Friends, the Knights of 
Maccabees and the other organizations, is not an Endowment feature, and hence don't 
come in under the objections raised by the members who have discussed this question. 
We are very apt to use insurance terms in trying to explain our own system. Xow, we 
are not insurance organizations. We do not furnish life insurance. That is — we 
hadn't ought to say so. (Laughter.) Because the moment that you use those terms 
that moment you place yourselves on the same plan with life insurance companies. 
We do not claim to be life insurance companies. The difference between the ordinary 
life insurance company and fraternal organizations is this : one furnishes life insurance 
at a profit, and we furnish life protection at cost. That is the difference. It is not 
insurance. Insurance is a commodity. They come into the market and make all they 
can from it, and we go into the market for mutual protection, and eive it to our mem- 
bers at what it actually costs. There is no question about that. So you see that w T e 
get off our base in using such language. There is where the trouble is. We don't 
want to characterize this 70-year feature as an Endowment feature at all. Xor do we 
want to admit that we are furnishing life insurance. If you do, you give yourselves 
away every time. We are giving protection to the widows and the orphans, and 
nothing more. We are not only furnishing protection to the widows and the orphans 
as protection, but we are furnishing protection to members while living, and when they 
reach the age of 70 we extend protection still further. We protect them in their old 
age by giving them certain benefits. Do you call that Endowment? We give them 
the money, certainly, but no more than we give the widows the money. You may as 
well say we are furnishing Endowments for the members when they become physically 
disabled or reach the age of 70 years. It is not an Endowment at all. And I don't 
want the members of this Fraternal Congress to get that idea into their heads. If you 
have got it, get it out as soon as God will let you, and don't allude to it in those 
terms again. Don't use that expression. I was very much pleased when Brother 
Shields, who presided over this Congress a year ago, called a member to order when 
he used the term "life insurance." He said this was not life insurance — it is "life protec- 
tion." And since that time I have never used the term "insurance" or "Endowment" 
in any discussion I have had in any of the public meetings I have held throughout 



34 

the country. I have avoided it, and urged those in these gatherings to drop those 
terms entirely, and they have done it, and I tell you we are bounding ahead on the 
Fraternal field with all sails spread. 

That is the reason why I want this Fraternal Congress to open the door to every 
organization that has that feature in it — that provides fraternity and protection to 
the member after he reaches 70 years of age as well as when he becomes physically 
disabled. I do not know that I would particularly object to paying at the expectancy 
of life, but still it is not as good as fraternity as the other features. (Laughter.) It 
smacks a little of the speculative — just a little of the speculative — these short-term 
fellows who pay in two, four, six, seven or eight years, who pay something for 
nothing. We cannot class them as Fraternities, notwithstanding they have hoisted 
the Fraternal flag. They are sailing under false colors. They are speculative organi- 
zations, and every one who goes into these organizations goes in there for the pur- 
pose of making money, and when you and I join the Knights of Honor, Royal Arca- 
num or the Ancient Order of United Workmen, we do not go in for speculation. We 
do not expect to make any profits from membership in these organizations, but we 
want to provide something for those that we leave behind us, and when we go into 
the Maccabees, the Chosen Friends and other good organizations, they expect to have 
something when they become physically disabled or reach the age of 7°- 

Mr. Stevens : 

I certainly endorse the doctrine that Brother Boynton has just announced here. 
I claim that a Fraternal organization can pay a permanent total disability benefit. 
I claim, as I did in my paper, that it will cost something to do it. It will cost some- 
thing more to do that than to do the other. I claim that the Order which pays at 
the age of 70 or 72 or 75, is not paying an Endowment benefit at all to any one. It is 
simply paying a permanent, total disability claim, and therefore I think it is proper 
to say that in all I said it had no reference to that principle, because I feel that that 
is a permanent, total disability payment, and not an Endowment payment. 

W. A. Smith: 

I shall not detain you long in the remarks I have to submit. Do Fraternal Societies 
make money by lapses? Here is a question that is rather delicate, and, to me, is one 
of great importance. Old-line insurance companies make their money by lapses. 
Are we, a Fraternal Society, going to take the ground that we must make our money 
by lapses? Are we going to take the ground that we must make our money from 
the unfortunates who are not able to keep up their assessments? That is the point. 
Is that Fraternity? Is there any Fraternity in it? This feature of Endowment has 
been referred to, and I believe the brother is right and honest in the conclusions 
that he has announced, that the Endowment feature will enhance the cost. It cer- 
tainly will. But what I wanted to say was that the Endowment feature, as it is 
carried on by the Society to which I belong, pays one-half of the amount at ex- 
pectancy. When one-half has been paid at the period of expectancy they go on and 
pay as they have done before, carrying their assessment, and the result will be, if they 
live a certain number of years, that they in course of time will die. Then the 
Society is reimbursed from the fact that it has only to pay half the amount. 

Following the discussion a resolution was adopted which instructed the Com- 
mittee on Legislation to "draft a bill for regulating the business and defining the status 
of Fraternal Societies, to be submitted to the several Legislatures. ,, 

This discussion of "Endowments" was due to legislative recognition of such con- 
cerns as the Iron Hall as Fraternal Beneficiary Societies. Failures amongst these 
"Endowment Fraternities" were anticipated and their methods were bringing into 
disrepute the Fraternal Orders like the A. O. U. W., Royal Arcanum and others. 

In passing, it may be an item of interest to give the following majority and 
minority reports from the Committee on Laws and Constitution. After discussion, 
the Independent Order of Foresters was admitted to membership. The reports 
follow : 

Your Committee on Legislation, Laws and Constitution, to whom has been re- 



35 

ferred the matter of the application of the Independent Order of Foresters, would 
respectfully report as follows : 

i. That having accorded the representative of said Order a due and proper 
hearing by your Committee, and after an examination of its Constitution, your 
Committee found that the Constitution of said Order contained provisions which 
made it ineligible for membership in this Congress, as it now defines a Fraternal Order 
in its Constitution. 

2. That your Committee deem it inexpedient and inadvisable to further amend the 
Constitution of this Congress that it may provide for membership therein of any 
Order containing any provisions or features of any character other than such as 
they now have and may have under the definition of a Fraternal Order, and now 
provided for in the Constitution of the Congress. 

3. That your Committee therefore recommend the Independent Order of Forest- 
ers be not admitted to membership, because of its ineligibility, and that it has leave 
to withdraw its application. 

The minority of the Committee on Constitution, Laws and Legislation dissent 
from the majority and would recommend the adoption of the following amendments 
to our Constitution and Laws : 

To amend paragraph 4, pa^e 56, as follows : By inserting after "disability," in the 
sixth line, the following: "Old age (to be not less than 63 years of age, with a 
minimum duration of membership of nineteen years)." 

Also to amend sub-division 5 by adding the following: "Or upon attainment of 
old age (not less than 63 years)." 

N. S. B0YNT0N, 

M. G. Jeffries. 
S. A. Will. 

The report of the Committee on Legislation was unanimously adopted, and with 
that adoption commenced that vigorous and systematic activity which ever afterward 
has characterized the work of the Congress in shaping legislation in the several 
States. I quote at length : 

The Committee on Legislation, Laws and Constitution respectfully report that 
the year 1891, in regard to legislation, proposed and enacted, has been fruitful in sug- 
gestion and in warning. It has been the legislative year in the large majority of States, 
and in most of them there has been some action proposed of importance to Fraternal 
Beneficiary Associations. We have, however, learned one valuable lesson from the 
experience of the year, even if much which ought to have been done has been omitted. 
That lesson is the absolute necessity of clothing this Committee with larger powers 
and placing at their command more adequate financial strength if it is expected that 
the Congress will secure for the Fraternal system which it represents desirable har- 
mony of the laws, or prevent the adoption of restrictive and hampering legislation. 
It is impossible to accomplish by correspondence the best results in either of these 
directions. The presence of the Committee, or some member of it, at important 
crises, either for the purpose of attack or defense, is absolutely essential in very 
many instances. So far as our experience has gone the presence of a representative 
of this Congress, strengthened by the influence which such representative power 
gives, has proved effectual and salutary. The Committee has not felt authorized to 
charge the Congress with expense in this respect. They recommend that their succes- 
sors be authorized, with the approval of the Executive Committee, or other advisory 
board, to incur such expense for personal visitation before Legislatures Lnd legislative 
committees and for correspondence and assistance, as may, from time to time, appear 
to be necessary and proper for the common protection of our important interests. 

A valuable result of uniformity of legislation will be probably, that we shall obtain 
in most, if not all the localities, laws applicable to our system alone, and that we 
shall no longer be associated with other and antagonistic systems in the same bill or 
Act. The average legislator today is in a woeful condition of ignorance as to what 
a Fraternal Order includes. In New Hampshire and Rhode Island, and perhaps 
elsewhere, the members of the Legislatures classed bond companies, endowment or- 



36 

ganizations and death benefit paying orders together, and it was in many instances 
extiemely difficult to convince such members that the same objections did not apply 
to all alike. The result is the passage in New Hampshire of one Act which includes 
all of these several kinds of organizations. While we have no criticism to make in 
this place of our associates in that Act, we do most emphatically declare it to be our 
wish in all States to have separate legislation for our system. Furthermore, we 
believe that such legislation in each State should be the authority for the admission 
therein of all Societies embraced within the terms thereof, and that such admission 
should not be by license from the Insurance Department or any State officer. It 
seems abhorrent to our Fraternal sensibility to be compelled to obtain a license to 
perform our deeds of charity and benevolence. We do not object to a requirement 
for annual reports, but we do ask that the Legislature shall settle by appropriate 
language the quesion of admission and not delegate the power to any one man or 
any body of men. 

The value of harmony and uniformity in State legislation is of no greater impor- 
tance than the existence of the same qualities in the decisions of the courts in the 
several States and Provinces. Our Societies ought not to be subjected to the pos- 
sibility of a successful attack in Massachusetts which would be defeated in Illinois, 
and, on the other hand, the member, or his beneficiary, should be accorded the same 
privileges to secure judicial recognition in the one State as the other. 

The Congress should adopt some measures whereby defenses to unjust demands 
may be so conducted everywhere that all the essential grounds of defense for similar 
causes of action should be presented, to the end that courts reach a harmony and 
uniformity of conclusion. If the Congress will clothe our successors, or some other 
committee, or some of its officers, with power to act as advisory counsellors for the 
local attorneys of the Societies which compose its membership, we believe that much 
good will be attained. This proposition does not in the slightest degree disparage 
the ability of counsel representing our Fraternities. In all cases they may be better 
lawyers than any who are available for the purpose presented, but the special expe- 
rience of the less able counsellor may happily supplement the skill and learning of 
the more able practitioner. 

Brothers, we believe that the time has arrived, in the history of the Congress, 
when it should formulate and adopt sound methods and measures for the common 
weal, and carry them into prompt and effective execution. 

We have met in four annual sessions and discussed the feasibility of our undertak- 
ing for practical work. By patient, earnest and laborious effort the friends of a 
National Fraternal Congress have succeeded in creating a strong sentiment in favor 
of its existence. To reach this opinion the progress has been exceedingly slow. It 
has, however, been attained, and we find a satisfactory degree of support from all our 
leading Fraternities. But the Societies which are here represented expect, now 
that we have become a strong organization, that we shall do something more than 
hold annual meetings, however fruitful they may be in cultivating social and friendly 
relations and in valuable discussions of vital questions. While there are many and 
varied ways in which the Congress can serve our Orders, none exceed in importance 
those which pertain to legislation and courts. They expect that we shall proceed 
to^ the accomplishment of our legitimate functions and duties. If we will do these 
things, they will, if we understand aright the prevailing feeling, accord to us all the 
support, financial and otherwise, necessary for the purpose, and if we fail in this duty, 
they will withdraw the favors hitherto generously granted, and the Congress must 
disband. 

Your Committee; therefore, in order that the suggestions which they have made 
and which they deem of vital importance to the prosperity of the cause we so gladly 
and proudly represent, and for the continued existence of this Congress of Fraterni- 
ties, shall not remain mere propositions, but become operative and useful forces, 
herewith present certain resolutions, the adoption of which they heartily recommend: 

Resolved. That the action of the Congress in providing for a committee to pre- 
pare a public Act relative to our Societies, and to press the adoption thereof in the 
several States and Provinces, be re-affirmed, and that the members of the Standing 
Committee on Legislation, Laws and Constitution be added to and made ex officio 
members of that committee. 

Resolved, That the Standing Committee on Legislation, Laws and Constitution be 
instructed to take all needful and proper steps to ascertain what are the laws of the 
several States, Provinces, Territories and districts affecting our Societies, and, in 



37 

regard thereto, to do whatever may seem to them required for the common protec- 
tion, if, in their judgment, any efforts are necessary in addition to those which the 
Special Committee are authorized to perform. 

Resolved, That the Standing Committee on Legislation, Laws and Constitution be 
instructed and authorized to act as advisory counsellors in any and all suits against 
our Societies, and that each Society is hereby urged to notify the Committee of all 
suits against it, the substance of the claims thereby respectively presented, and the 
name of the attorney conducting the defense, and that the Committee keep a record of 
such suits and their action in regard thereto. 

Resolved, That the Committee on Legislation, Laws and Constitution be author- 
ized, upon the previous approval in writing thereof by the President, Vice-President 
and Chairman of the Finance Committee, to incur such expenses as may be necessary 
to properly perform their duties. 

Resolved, That, for the purpose of obtaining the necessary funds to carry out the 
provisions of the resolutions hereinbefore presented, and also for the performance by 
the Special Committee of its work, the provisions of paragraph 4 of Section 5 of the 
Constitution and Laws be suspended for the year next ensuing, and that for such year, 
but not afterward, except by due vote of the Congress therefor, the membership fee 
for each Society shall be $20.00, and, in addition thereto, the sum of one mill for each 
and every one of its members in good standing on the 31st day of December, 1891. 

John Haskell Butler, 
J. W. Kinsley, 
J. M. Swain, 
M. W. Sackett, 
S. A. Will, 
John Otto, 
F. D. Macbeth, 
M. G. Jeffries, 

N. S. BOYNTON. 

At this time (1891) the "Open Assessment Associations" were numerous and 
popular, and the question of distinguishing between them and the Fraternal Bene- 
ficiary Societies became one of importance. To indicate the thought of the day I 
quote from a paper read by Mr. D. E. Stevens in discussing "Topic 15" of the pro- 
gram: 

"How can our laws be so framed as to secure from the courts decisions which 
will clearly define the difference between the Charitable Aid furnished by the Fra- 
ternal Orders and the business payments of the Open Assessment Association." 

The word charitable in this question, I take it, is used in. its primary and best 
sense. The question, in the light of the more common meaning of the word char- 
itable, would probably have been more readily or fully understood if it had read, 
"How can the Laws of Fraternal Orders be so framed as to secure from the courts 
decisions such as will clearly recognize the difference between such Orders and Open 
Assessment Associations?" It appears to me that a comprehensive and proper answer 
to this question would be, let our laws be so framed and maintained as to clearly 
show that the aid which we furnish is fraternal or charitable — that is, that our corner- 
stones, as well as the Orders builded thereon, rest upon a foundation of brotherhood. 
With no word of criticism for the Assessment Company nor any institution which in 
any manner tends to help men do we come to the consideration of this question. We 
cannot in justice to the Orders separately consider one feature of their work, even 
though it be an important one, and especially not the payment of death benefits, for 
most of the Orders protect the interests of their worthy members against forfeiture 
during sickness, without compensation or return, aside from the Fraternal feeling or 
principle. When viewed as a whole, there is a wide difference between a genuine 
Fraternal Order and an Assessment Company. In fact, although in one particular, 
that of the payment of death benefits, they may each have a road which leads to the 
same end, they are as to foundation and structure entirely different. The Company 
depends upon its army of paid agents to secure new members, while the Order, in 
exemplification of its principles and the carrying out of its system, depends upon its 



38 

army of unpaid members to secure nezu entrants. The Company charges from three 
to four dollars per thousand per annum for expenses, so as to carry out its plans, 
while the Order collects from thirty to fifty cents per thousand per annum for expenses 
to carry out its plans. The difference of from $2.70 to> $3.50 per thousand per annum 
standing for the difference between the business transaction where the labor is paid 
for and the voluntary, unpaid labor of the members of the brotherhood, who, through 
their interest in and love for their Order and their fellowmen, gladly do the work. 
Are some of our Lodges forgetting this great difference? That cannot change the 
principle. The Fraternal Order through its Lodge system provides for the visitation 
of its sick ; helping its own in their time of need, and admits to membership only 
those who agree to become a part of a great brotherhood, which not only pays benefits 
to the families of its deceased members, but which inculcates lessons of charity by 
doing deeds of charity. The Order constantly appeals to man's better nature, even 
tending to make him a nobler man and better citizen. 

Such Orders certainly must watch well against and promptly check the growing 
disposition to make them Life Insurance Companies, by copying into their laws those 
features which now distinctly mark the difference between Companies and Orders. 
To show a difference, there must, in fact, be a difference. When an Order has only 
the semblance of the Lodge system; when an individual can become a member with- 
out entering one of its Lodge rooms ; when it undertakes to do an endowment or 
tontine business ; when it forgets or forsakes the visitation of its sick, having only 
the form and none of the spirit of an Order ; when its plans appeal to the selfish 
side of man ; vohen new members for its established Lodges are secured through paid 
agents; when it permits members to name as beneficiaries those who are not of their 
families, heirs or dependent ones ; when it says that an insurable interest, growing 
out of an indebtedness to one of no relation to the member, may be covered by mem- 
bership in it ; when it allows a man who has an insurable interest in his partner to 
cover that by one of its benefit certificates ; when its members can make their estates, 
and thereby their creditors, their beneficiaries; when its benefit certificates have a 
surrender value, then I beg to ask how a Court or anyone else is to tell why it should 
not be called an Insurance Company or Association, and, although it may call itself 
an Order, it will in no sense be such, nor should it. 

Let the language of our laws clearly express the contract of membership showing 
that each and all of the members are part of a brotherhood, not for speculation or 
profit, but to help each other ; making the supreme body of the Order the Court in 
which all grievances shall be heard and rights determined. Then secure in such 
States as now have no such laws the passage of laws providing that in such Orders 
the contract entered into by the members thereof shall govern and be the only guide 
as to what was intended, and that all of the members shall be governed thereby. 
Then the Orders which adhere to the foundation principles that underlie all of the 
genuine Beneficial Orders of America to-day — that of a body of men bound together 
for their common good, each endeavoring to help the other in truly carrying out all 
that is included in the Lodge system of a true Fraternal Order; admitting to mem- 
bership those only who enter the portals of their Lodges in the appointed way; 
helping its needy, visiting and comforting its sick, burying its dead, furnishing its own 
members relief if wholly disabled by disease, accident or old age, and to the widow 
and orphans of its deceased members the means for their sustenance ; knowing and 
caring for its own and their loved ones, and they alone, leaving to other institutions 
all of the field Which has, and forever should, lay outside the lines of a Secret Bene- 
ficial Order, there is, and will he. a difference, and such a difference as must finally 
triumph in equity, in law and in popular favor. 

John A. Ilinsey's remarks on Topic 15 were as follows: 

This question is one that involves much study. Nearly all of the Fraternal Socie- 
ties who pay to the beneficiaries of deceased members a death benefit of $1,000 or 
more will certainly not claim that such contribution is purely a charitable aid; in 
fact, many of us are in the insurance field competing with the open assessment asso- 
ciations and old line companies as well as with all other insurance concerns. 

The organizers of subordinate bodies in their endeavors to obtain membership 
certainly do not claim that theirs is not an insurance based upon business principles. 
On the contrary, so far as this insurance itself is concerned, they make that claim 






39 

strongly. True, we are not corporate bodies organized for the purpose of gain, and 
there are no stockholders, directors or other officers receiving large salaries, while 
with the open assessment associations such is to a great extent the case. We are doing 
business for mutual aid only, and in doing so the cost in guaranteeing a certain amount 
of protection has been placed at an absolute minimum figure, while the associations 
termed by the Congress "open assessment'' have no doubt also placed the mortality 
cost as low as safety will permit, but in addition thereto various factors, such as 
expense, reserve fund, etc., have been added, which together aggregate a cost much 
greater than ours. 

The insurance laws of a number of States exempt us as secret Fraternal Societies 
from compliance with the requirements of open assessment associations and old line 
companies, and no doubt in a number of cases the decisions of courts have defined 
clearly the difference, especially in the fact that members of Fraternal Orders agree 
to abide by the laws, rules and regulations that may be from time to time enacted; 
that such agreement forms the contract by which they are bound. It has/ also been 
held that the violation of any agreement, or a failure to obey the laws as enacted 
from time to time, may work a valid forfeiture of all rights, title and interest in the 
benefit fund. 

However, when the beneficiary of a member seeks to enforce the payment of a 
contract which, for some apparent good reason, has been refused, the issues assume 
a legal aspect and must be treated in that manner when presented for judicial decision. 
Under such circumstances courts would no doubt define us as business institutions 
and compel the performance of such contract in the same manner as they would if 
I the action had been brought against an open assessment association. 

In 191 3 how nearly do Fraternal Beneficiary Societies approach the status of 
l "Open Assessment Associations" of 1891 ? 

The session of 1891 was a memorable one for the number of important questions 
I discussed and plans for action adopted. The subject of "Uniform Blanks" was thor- 
oughly considered, and the remarks of Mr. J. A. Hinsey should prove of interest: 

I have given the question of reporting to State insurance departments considerable 
study. There are now a number of different forms in use. For Fraternal Societies 

I I regard the form in use by the insurance department of the State of New York 
to be the most; complete of any of the States to which we are now making reports ; 

i and Iowa and Wisconsin have adopted this form almost wholly. The forms of each 
of the other States to which we are now reporting are quite different, though in none 

I of them the information desired covered so wide a range. The Nebraska form is, 

I to my mind, the most defective. 

A brief synopsis of the requirements under the New York form is herewith given : 

First. — Balance sheet showing cash receipts and disbursements and balance on 
hand at the end of the year. 

Second. — Statement of invested assets. 

Third. — Statement of non-invested assets. 

Fourth. — Statement of liabilities. 

Fifth. — Statement of contingent mortuary assets. 

Sixth. — Statement of contingent mortuary liabilities. 

Seventh. — Exhibit of certificates or policies, requiring under the separate headings 
j the number of members under one heading and the membership for the State only 



under another. Following same appears an exhibit of the number of members and 
the amount of insurance in force under each age (present age being desired). 



Eighth. — A number of miscellaneous questions embracing general information 
'. regarding the character of the business of the association, its plans, manner of 
' electing officers, etc., then follows : 



40 

Ninth. — A list of all losses paid during the year, requiring the certificate of policy, 
number, name, date of payment, etc. 

Tenth. — A list of all losses unpaid at end of year. 

Eleventh. — An exhibit of assessments made during the year. This statement 
requires information as to number of assessment, class, date of issue, number of 
members in force at time of issue, the number actually assessed, the amount of assess- 
ment, the amount collected and its final disposition ; whether disbursed for death 
losses or other items. 

Twelfth. — A number of schedule forms requiring information as to invested assets 
of every description, information as to values, incumbrances, etc., being required. 

The Societies represented in the Congress in 1891 were: Ancient Order United 
Workmen, Knights of Honor, Royal Arcanum, American Legion of Honor, Order of 
Chosen Friends, National Union, Knights of Maccabees, Order of United Friends, 
Royal Templars of Temperance, Equitable Aid Union, Knights and Ladies of Honor, 
Improved Order of Heptasophs, Home Circle, Fraternal Mystic Circle, Knights of 
the Golden Rule, Fraternal Legion, Order of Golden Chain, Order of Mutual Pro- 
tection, Royal Society of Goodfellows, North Mutual Relief Association, Endow- 
ment Rank Knights of Pythias, United Order of Pilgrim Fathers, Protected Home 
Circle, Artisansl Order of Mutual Protection, Legion of the Red Cross, Woodmen of 
the World, Knights of St. John and Malta, Independent Order of Foresters and the 
Iowa Legion of Honor. The 28 Orders had about twelve hundred and fifty thousand 
members. 

This congress authorized the appointment of a Special Committee to draft a 
Uniform Bill which was to serve for the years 1892-3 (just 100 years after the first 
Act of Parliament for the regulation of Friendly Societies, and twenty years after 
the great Act of 1875). The Bill prepared by this Special Committee has been the 
model from which others have been written. The men who composed the Committee 
were : John Haskell Butler, Massachusetts ; W. B. Beebe, Connecticut ; H. H. Morse, 
Xcw York; John Otto, New Jersey; M. W. Sackett, Pennsylvania; John B. Treibler, 
Delaware; Oliver B. Craig, Maryland; D. E. Stevens, Ohio; Frank D. Macbeth, 
Indiana; Frank N. Gage, Illinois; D. P. Markey, Michigan; John A. Hinsey, Wis- 
consin; E. R. Hutchins, Iowa; B. F. Wilson, Missouri; W. O. Rodgers, Nebraska; 
J. W. Kinsley, Montana; B. A. Harlan, District of Columbia; J. A. McGillivray, 
Ontario; H. C. Sessions, South Dakota; A. R. Savage, Maine. Subsequently there 
were added to the Committee: M. G. Jeffries, Wisconsin; J. E. Shepard, Massa- 
chusetts; W. R. Spooner, New York; W. A. Fricke, Wisconsin; M. W. Van Auken, 
Xew York; J. J. Acker, New York; W. N. Davenport, Massachusetts. 

At the sixth Annual Session of the National Fraternal Congress, held in Wash- 
ington, 1). C, November 15. 1892, this Special Committee was consolidated with the 
standing Committee on Legislation, composed of S. A. Will, Julius Swain. N. S. 
Boynton, W. O. Robson and John A. Hinsey and others already mentioned. 

The Special Committee on the Revision of the Uniform Laws to be entitled, "An 
Act Regulating Fraternal Beneficiary Societies, Orders or Associations," reported a 
Bill of fifteen sections, in full, or in substance, as follows: 

Section 1.— A fraternal beneficiary association is hereby declared to be a corpora- 
tion, society or voluntary association, formed or organized and carried on for the 
sole benefit of its members and their beneficiaries, and not for profit. Each associa- 
tion shall have a lodge system, with ritualistic form of work and representative form 
of government, and shall make provision for the payment of benefits in case of 



41 

sickness, disability or death of its members, subject to their compliance with its con- 
stitution and laws. The fund from which the payment of such benefits shall be made, 
and the fund from which the expenses of such association shall be defrayed shall be 
derived from assessments or dues collected from its members. Payment of death 
benefits shall be to the families, heirs, blood relatives, affianced husband, affianced wife 
of, or to persons dependent upon the member. Such associations shall be governed 
by this Act and shall be exempt from the provisions of insurance laws of this State, 
and no law hereafter passed shall apply to them unless they be expressly designated 
therein. 

Section 2 provides that all associations then doing business in the State, and 
coming within the description of Section i, may continue such business. 

Section 3 provides that any association coming within the description of Section 
1, organized in another State or Province, but not then doing business in the State, 
should be admitted on filing copy of charter, etc., and paying prescribed fees. 

Section 4 provides for an annual report to be filed by March 1 and giving details 
of condition under twenty-five items specified in the Bill. The Commissioner is 
empowered to require any additional information "in relation to its doings or con- 
dition, or any other matter connected with its transactions relative to the business con- 
templated by this Act, and such officers of such associations as the Commissioner of 
Insurance may require shall promptly reply in writing, under oath, to all such 
inquiries." 

Section 5 provides that the Commissioner of Insurance shall be appointed as 
attorney to accept service of any legal action. 

Section 6 provides for the issuance of a license. 

Section 7 provides for incorporation. 

Section 8. — Such associations shall not employ paid agents in soliciting or procuring 
members except in the organizing or building up of subordinate bodies or granting 
members inducements to procure new members. 

Section 9. — No contract with any such association shall be valid when there is a 
contract, agreement or understanding between the member and the beneficiary that 
the beneficiary or any person for him shall pay such member's assessments and dues, 
or either of them. 

Section 10. — The money or other benefit, charity, relief or aid to be paid, provided 
or rendered by any association authorized to do business under this Act shall not 
be liable to attachment by trustee, garnishee or other process and shall not be seized, 
taken, appropriated or applied by any legal or equitable process, or by operation of law 
to pay any debt or liability of a certificate holder or of any beneficiary named in a 
certificate, or of any person who may have any right thereunder. 

Section 11 provides for meeting of the legislative bodies in other States or Prov- 
inces than where incorporated. 

Section 12 provides penalties for false and fraudulent statements. 

Section 13 provides procedure against an association for refusing to make report 
as required. 

Section 14 provides penalty for acting as officer, agent, or otherwise in violation 
of the law. 

Section 15 provides for the repeal of laws inconsistent with the Act, and exempting 
Masons, Odd Fellows and similar Orders from the application of the Act. 

By unanimous consent the Uniform Bill as reported was referred to a Special 
Committee of five to be edited before being printed and the President (M. G. Jeffries) 
was appointed as the special representative of the Congress to attend the next Con- 
vention of Insurance Commissioners and present for their approval the Uniform Bill. 

It was reported to the Congress that contemplated legislation in Canada would 
prevent Societies of the United States from thereafter securing permission to operate 
in the Dominion. 



42 



Mr. James E. Shepard read a paper on British Friendly Societies which should 
have had serious consideration and should have served as a lesson to fraternal man- 
agers. It appears to have made no immediate impression. The concluding paragraph, 
had it been applied to the Fraternal Orders and heeded, would have saved a world 
of trouble. It follows: 

There are societies full of erroneous features. The first, and perhaps the most 
important, is the inadequacy of the rates of contribution demanded from members. 
The rates have apparently, in most instances, been calculated not so much after 
consideration of the value of the risks incurred as with the desire to frame a scale 
of subscriptions, which, from its liberality, would be likely to become popular. A 
society will sell for threepence a week benefits that in reality should be rated at 
sixpence; hence bankruptcy is, sooner or later, inevitable. Nor is the case thus sup- 
posed by any means extreme or rare. . . . Trusting to the so-called profit from 
secession (lapses) it is deemed sufficient if the society pays its way, and if the claims 
for sickness are not more than the total premiums received — no margin, or but little, 
remaining to be invested as a provision for future years. 

I have stated that the general laws for the control of Fraternal Beneficiary Societies 
were enacted in New York and Massachusetts in 1888. 

The first Uniform Bill, with the sanction of the National Fraternal Congress, 
became a law in Michigan in 1893, exactly 100 years after the first Act of Parliament 
in relation to Friendly Societies. 

The provisions of this Uniform Bill are in striking contrast with the utterances 
heretofore quoted from the proceedings of the Congress. Then it was contended that 
State legislation was neither necessary nor desirable. At the seventh Session of the 
Congress at Cincinnati in November, 1893, we have the unanimous adoption of a 
recommendation to secure the enactment of the Uniform Bill by States having no laws 
relating to Fraternal Societies. 

During 1893 the States of Michigan, Illinois and New Jersey enacted into law 
(with some modifications and changes) the Uniform Bill prepared in 1892 by the 
Committee on Legislation. 

The State of Maine eliminated from its laws the authority of endowment societies 
to transact business, while New Jersey continued such authority. The Maine law 
(Section 3, Chapter 234) was otherwise amended. 

A law was enacted in Pennsylvania which was little more than a definition of a 
Fraternal Society and exemption of such Society from the general insurance laws. 
An annual statement of the usual form was required. 

The eighth Annual Session of the National Fraternal Congress was held at Buffalo 
in November, 1894. I quote from President N. S. Boynton's address to show that 
some leaders were not in sympathy with the progress made after 1890: 

Your President has been, and is now, considered quite radical in some of his 
views, particularly in regard to the objects and purposes of Fraternal Beneficiary 
Societies and the necessity for drawing the lines closely between the various systems 
of life protection, and no doubt sonic go SO far as to say that he is a "crank" in that 
respect. Well, possibly the appellation is not out of place, and I accept it good 
naturedly. 

After a trial of two or more years to secure uniform legislation, I have about 
come to the conclusion that we made a mistake in framing a Uniform Bill which places 
our Fraternal Beneficiary Societies under the supervision of the. insurance departments 
in the different States. Not that T am adverse to State supervision, but because I 
think it ought to be done by some official other than the Insurance Commissioner, 
even if such an office had to be created for that special work. We ought to be 



. 






4 3 

entirely divorced from the speculative, cold business associations. So long as the 
voluntary beneficial associations are even indirectly associated with the other sys- 
tems, just so long will they be looked upon as a part and parcel, or at least as an 
auxiliary, of the old line companies. 

Now, let me draw the lines clearly and distinctly so there can be no mistake. 

At each session since this Congress was formed the matter of uniform State 
legislation has been a subject of earnest discussion. While in nearly every State they 
were exempt from the operations of the insurance laws, it was conceded that they 
should come under some kind of State supervision as a protection to themselves and 
prevent our societies from being classed with a large number of so-called fraternal 
bodies or associations organized for speculative purposes. 

The lines of demarcation between the three systems are clear and distinct and 
should be kept so in all legislative enactments. 

The objects of these Fraternal Orders or Associations, as incorporated in their 
fundamental laws, will be found substantially as follows : 

First. — To unite fraternally all persons of sound bodily health and good moral 
character who are socially acceptable, etc. 

Do the insurance and assessment companies provide for this? 

Second. — To give all moral and material aid in its power to the members and those 
dependent upon them. 

Do the two other systems do this? 

Third. — To educate the members socially, morally and intellectually. 
Do you find this object in the laws of the other systems? 

Fourth.— To create a fund for the relief of sick and distressed members, and to 
care for the living and bury the dead. 
Do the other systems provide for this? 

Fifth. — To establish a benefit fund or funds from which, on satisfactory evidence 
of the death of a beneficial member of the Order who has complied with all its lawful 

requirements, a sum not exceeding dollars to be paid to the beneficiary 

of such member, as he shall direct, and as the laws of the Order shall provide, and 
upon the total and permanent disability of a beneficial member, either as a result of 
disease, accident or old age, who may be in good standing with the Order at the time 
of the incurrence of such a total and permanent disability, such sum of money and in 
such manner as may be fixed in the laws of the Order. 

Do the purely business corporations provide for such protection? 

Sixth. — To establish a fund or funds to pay such sick, funeral and accident benefits 
as its laws may provide. 

Do the insurance companies establish such funds? 

The laws of the National Fraternal Congress, representing the legitimate fraternal 
beneficiary system of this country, define what societies may be represented therein, 
as follows : 

Xow, I hold that the fraternal system is entirely different, separate and distinct 
from the old line or level premium system and the open business assessment system. 
Only those societies, corporations or associations organized and carried on for the 
sole benefit of their members and beneficiaries, not for profit and gain, can be classed 
as legitimate Fraternal Beneficiary Orders. 

The mutual agreement between the fraternal society and the member is not a policy 
or contract like that entered into between a life insurance company and its policy- 
holder. The fraternal societies simply issue a certificate of membership in which the 
member agrees to comply with all laws, rules and regulations in force at the time he 
becomes a member, and with all changes in the laws, etc., that may be made during 
his membership. 

The fraternal beneficiary system makes no contract of insurance with its mem- 
bers in the common business acceptation of the term "insurance." Nowhere in the 
objects and purposes or the fundamental laws of the associations composing the 
national fraternal beneficiary system, or the laws governing the National Fraternal 
Congress representing this system, can the terms "Policy" or "Insurance" be found. 

As I have said heretofore, and now reiterate, very few of the members and many 



44 

of the officers of Fraternal Benefit Societies realize that the great benevolent co- 
partnerships or associations to whichl they belong, simply furnish them pecuniary aid 
in case of disability arising from sickness, disease, accident or old age, and their 
families protection or a certain competency in the event of their death. They are not 
insured nor furnished insurance. 

With this widespread misunderstanding of the objects, aims and purposes of the 
Fraternal Beneficiary Orders among their officers, members and journals, is it any 
wonder that our legislators look upon our societies as cold, business corporations, 
covered by a gauzy fraternal mantle, and will it not account for the difficulty experi- 
enced heretofore by the Orders through the National Fraternal Congress to secure 
favorable legislation, both in the State Legislatures and in the United States Congress? 

The forward movement could not be stopped, and President Boynton's rather 
antagonistic position was not accepted as the true attitude of the majority. This is 
clearly indicated by the special report of the Committee on Statistics and Good of the 
Orders to which his address had been referred. And this reference culminated in 
other special reports by that Committee which have revolutionized the business of 
Fraternal Beneficiary Societies and resulted 1 in radical legislation in relation to con- 
tribution rates and valuation. 

In 1894 the Uniform Bill was passed by both houses of the Legislature of Iowa, 
but was vetoed by the Governor. An unsatisfactory bill was defeated in Maryland. 
The Congress made some changes in its draft of the Uniform Bill, but not material to 
its important provisions. 

In 1895 a new draft of the Uniform Bill was submitted to the Congress at its 
Ninth Annual Session in Toronto. The changes were not of sufficient importance to 
justify recording in this history of legislation. 

The most important and far-reaching movement ever taken by the Congress had 
its inception at the Ninth Annual Session in a Special Report submitted by the Com- 
mittee on Statistics and Good of the. Orders, which was incidentally the result of the 
Committee's report in 1894 on President Boynton's address. This Special Report was 
of such grave import that it was read and considered- in executive session, behind 
closed doors and without the stenographer. For four hours there was heated dis- 
cussion and then an adjournment until the following day. After further consideration 
in executive session the only action was "to continue consideration of the subject 
matter for the ensuing year and make report to the Congress at its next stated 
meeting." 

I quote from the Special Report : 

Tn the beginning of these Orders we proceeded on a theory that we mistakenly 
and without experience assumed to be an established fact, and it has until lately been 
accepted as sound, that through the process of additions and lapses a standard of 
average age could be secured and maintained that should not increase as an Order 
was longer and longer in business. It has been evident to many that this theory was 
untenable, and in order to clearly demonstrate that the change in view was demanded 
of all in interest and could not longer be safely ignored, your committee prepared a 
special blank for the use of the societies from which the data necessary to the proper 
understanding of prevailing conditions, that prove the theory unsound, might be readily 
attainable and will appear in tabular form as a part of this report. 

Analysis of the table leads to the inevitable conclusion that barring merely the 
inceptive period of an Order, when conditions more or less abnormal prevail, that there 
exists a gradual and very general increase in the mortuary rate wholly due to the 
increasing average of age, or, in other words, the greater maturity of lives. In short, 
comparing the "Theory" and the "Result," we come to the inevitable conclusion that 
the one has no relation to the other and that administration based on "Theory" must 
give place to government by "Fact." 



4 5 

We believe that the existing Fraternal Orders can he perpetuated provided they 
heed the lesson and the warning that the experience of the past so plainly gives and 
teaches. 

As the object of this reference was to devise, if possible, a plan of procedure that 
should be best for all concerned, it is proper to say here that, while the Fraternals 
proceed on the same general line in prosecution of their work, there are so many 
different methods of management that a rule applying to one would not apply to 
another, and any general rule must either be modified, and thus in part nullified, to 
meet the requirements of our variance in administration, or our varying plans must 
be brought to some common agreement. Here lies the first difficulty. 

It is indispensable to recognize the Law of Mortality as the governing factor. If 
this be admitted, safety demands, if the Benefit be a fixed sum, that the contribution 
or rate should be graded to age, or, in other words, to the risk of dying, so as to 
conform to that Law ; or if the rate of contribution be flat or graded at age at entry 
to be maintained during life, then Equity demands that the Benefit should be graded 
proportionally to time of continuance or such other modification made as shall be 
fair and just in bringing contribution and return to their proper portion. 

The rate fixed for life at the age of entry is common to nearly all the Fraternal 
Orders. Our experience demonstrates that it is faulty in theory, unsound in practice 
and should be remedied, and this can be accomplished by increasing the rate with 
increasing age or by so adjusting the rates as to establish a fund that shall equalize 
the cost throughout life, or, in other words, establish a Reserve. If with our experi- 
ence we should institute a new Fraternal Order at the present time, one or the other 
of these, the law permitting, perhaps more or less modified, but in substance the same, 
would probably be adopted. In the proposition advanced the elements of "Safety" and 
"Equity" are separated, and first to be considered is the element of "Safety." 

Loading the rate at age of entry to minimize the cost of advancing years is the 
Old Line Plan of the reserve. The establishment of such a fund has, until within a 
year or tw r o, been generally condemned by the Fraternal Orders, not for the reason 
that it is not of itself good, but that it has been improperly administered and made a 
means of gravest abuse. 

Properly adjusted to our requirements, it would make protection certain, work 
wrong to no man and be in the direct line of safety. 

Any table based on this plan must be aecurately worked out and grounded on the 
condition of a fixed annual amount payable by installment, of which a certain per cent, 
with its increment of interest, will form a reserve fund. This reserve can very safely 
be largely reduced from the reserve based on the standard tables. It would be 
subject to this disadvantage that it would go beyond the limit of what Fraternal Orders 
may do in certain States, and in these States additional legislation would be required. 
It would undoubtedly bring us more under supervision, would increase the cost of 
management, require larger contributions in the beginning to the Benefit Fund and 
lay us open tcv the unfounded but plausible objection that we had departed from our 
original purpose, but, despite these drawbacks, would be right in line with the best 
interest of every member of every Fraternal Order. 

The step rate might be so modified and arranged by adjusting and increasing each 
advancing term to age when the rate would become such a burden as to be intol- 
erable that the accumulations would then take care of the excessive cost of the future. 
In this way the step rate and reserve plan would be combined and the best features of 
each secured. 

In approaching the matter of an equitable rate that should not burden, and yet 
should make certain, your committee cannot bring to its consideration the scientific 
skill of the trained actuary, but they venture to present in this line some of the features 
of the reserve and the effects it will produce based upon varying conditions. The 
partial tables independently presented are substantially mathematically correct and 
can be worked out in full with little expenditure of time and effort. Into them enter 
two elements that cannot be ignored, namely, the natural cost and the increment of 
interest on the amount paid to the Reserve, the amount contributed to the Reserve 
being modified to meet some of the many objections brought against it. 

Possibly further modifications might be made in the direction of smaller cost and 
greater returns. 

The second clause of the proposition will require but brief consideration. If some 



46 

plan is not provided so as to fully provide for the safety of the member, then Equity 
demands that contribution and return shall be proportionately adjusted. If the rates 
.now paid cannot be raised (and as at present established is not sufficient to provide 
for the payment of the certificate in full without injustice to other members) there 
remains but one remedy within our reach, and that is to reduce the promise of per- 
formance to a just, honorable and true fraternal ratio with contribution. Should this 
plan be attempted, there is to be considered what is a proper reduction, and as it is a 
matter of proportion merely that can be readily ascertained, it seems to require no 
particular demonstration at this time. 

Your Committee have not labored under the delusion that what they might offer 
would be the best, or that, provided it were the best and most practical, that existing 
Orders, even if they would, could make the radical changes that the adoption of a new 
plan would require. 

We are too long established, our number too great, our membership too little 
instructed and too firmly convinced that the cheapness of the old way will always 
prevail to be readily changed, and -it may not he rash to intimate that possibly there 
are some in this body who are but partially convinced of the necessity of any change 
whatever. 

Your Committee would earnestly urge that whatever change be attempted at any 
time in the future it shall be one that shall be effective in curing the evil to which it 
applies and not such a one as merely replaces one ill with another, perhaps in time 
to be more unendurable than the original. Any change must be reasonable and wise, 
and if such cannot be brought about, then we should attempt none, for an unwise and 
defective effort would of itself work very grave injuries. As our formative period 
has passed, the educational period now succeeding it should be the object of our 
united efforts, and, when education has sufficiently advanced, then the changes needed 
will come without shock or jar to the system. The ills now* known and appreciated 
by the few will in the school of experience be fully known to the many, and with 
adjusted and equalized contribution and return we shall enter upon a phase of exist- 
ence that shall go as far beyond what we have heretofore done, as what we have here- 
tofore accomplished is in advance of what we were twenty years ago. What your 
Committee have attempted is to present certain matters as directing merely along an 
educational line. 

Is it too much to say that if experience teaches that changes are necessary and 
such changes are not made because of prejudice, lack of appreciation or an undue 
sense of security based upon the plausible but untenable theory that what has been 
will continue to be, then the law of the survival of the fittest will produce its natural 
and inevitable results? 

The Special Report was signed by J. E. Shepard, D. E. Stevens and H. A. Warner. 

At the Tenth Annual Session of the Congress in Louisville, November. 1896, the 
Committee on Statistics and Good of the Orders made a second Special Report, which 
was signed by J. E. Shepard, D. P. Markey, D. E. Stevens, B. F. Nelson, H. A. Warner, 
E. L. Brown and E. R. Hutchins. 

In this report facts and figures were presented to support the general allegations 
of the insufficiency of existing contribution rates to provide for promised benefits. 
I limit quotations to a few excerpts: 

Age can have but one result, and here is found the greatest factor of increased 
cost. It, in fact, dominates our plan. 

As a chain is only as strong as its weakest part, so may we not say that the 
strength <>f the Fraternal System as a whole is as strong as its weakest part; and, if 
should not its weakness rather than its strength be considered? 

'I o some oi US already comes a condition which we believe has been brought about 
by the full and natural effect of what we have endeavored to point out as a menacing 
danger to us all which might and could have been avoided in great part had we wisely 
provided against it in the beginning. Your Committee have taken much time in dem- 
onstrating matters of very easy attainment and common knowledge and now beg to 
ofTer for your consideration another and just as potent factor of evil, just as well 



47 

known to us all, just as little heeded and entirely in our control, towit, onr attempt 
to ontdo to so great an extent every form of insurance or protection heretofore 
devised ; and, while so attempting, give no heed to maxims of prudence or show any 
inclination to take advantage of experience of others and in so doing be enabled to 
shun the evils which came to their knowledge through this same experience that we 
quote, generally cast aside with contempt. 

Your Committee, in closing, desire to say that they endorse as sound the con- 
clusions embraced in the Special Report made at Toronto and would supplement it 
by saying here that, in their opinion, there is no better, and certainly no safer, time 
to reform our plan than now, if it can be attempted on right lines, for a reform 
attempted in other than the right direction would be no reform at all and would work 
a double disaster. 

We have in combination two elements in chief with which we must contend : First — 
An increasing liability because of an ever increasing mortuary rate which may be to 
a great extent modified and held in check for a longer or shorter time by a large 
increase in membership — and again arises the question, does anyone claim the neces- 
sary increase can always be maintained? Second — An improper rate of contribution 
and return by which the present draws upon the future to an unjustifiable extent. The 
first is partly, the second wholly, in our control. Neither of these can be entirely 
remedied by increasing the frequency of assessments or by any method that shall 
leave the cause unchanged. 

The gross inequality between contribution and return must be properly adjusted. 
A general move should at once begin to educate all our members to a full realization 
of the fact that impossibilities, even if labeled "Fraternal," are still "Impossibilities/' 

The greatly enhanced liability of the future must in some way be provided for or 
guarded against in the present. The old member who will be first to protest at any 
change in his rate must be brought to realize that any change in the right way is in 
the direct line of his protection first of all. 

In bringing their work to an end your Committee, from the facts and data which 
have come to them and which they in part have submitted in this report, do unani- 
mously recommend to this Congress that as the representative of our Fraternal System 
u shall declare that it is the imperative duty of the several Orders represented here 
to make, at the earliest practical date, proper provisions for meeting the inevitable 
increase in the rate of mortality by an adjustment of rates so that contribution shall 
be equitably proportioned to the hazard at risk. 

This second Special Report was also considered in executive session and finally 
referred back to the Committee for further investigation with instruction to make a 
third report in 1897. On motion of Dr. Oronhyatebeha, the Committee were further 
instructed "to prepare and present to the next Congress such plans or systems of 
fraternal beneficiary protection that seem to them best adapted to the establishment 
of permanent fraternal protection at the lowest possible cost." 

Supplemental to its Special Report the Committee gave the plans upon which the 
Ancient Order of United Workmen and the National Reserve Association had re- 
rated, and the plan proposed for the Royal Arcanum to be acted upon in 1897. 

The general statements by the Committee are clear-cut, comprehensive and correct 
expositions of sound insurance principles, and they are supported by unquestioned facts 
from the actual experience of Societies which were members of the Congress. The 
presentation, supplemented by the more direct and concrete reports of 1897 and 1898, 
convinced those who attended the sessions of the Congress and culminated in the con- 
struction and publication of the National Fraternal Congress Table of Mortality and 
contribution rates deduced therefrom. But the educational effect contemplated by the 
Committee did not materialize in so far as the membership at large were concerned. 
Besides this there developed serious differences between the officials and managers, 
even between associate officers in the same Society, and from 1900 to the present 
writing an almost continual internecine (or maybe more properly fratricidal) warfare 



48 

has been waged between officials of different Societies or between officials and mem- 
bers of the same Societies. But in the midst of this conflict educational progress has 
been made as will appear in the continuation of this history. 

The Committee on Statutory Legislation reported to the Congress in 1896 that 
the year had been fruitful in gain to the cause of uniformity in legislation. The 
Uniform Bill had been enacted into law in Ohio and Iowa, and objectionable bills 
had been defeated in the State of Maryland and the Province of Quebec. 

The Eleventh Annual Session of the National Fraternal Congress convened in 
Port Huron, October 15, 1897. This meeting is of particular interest to the student, 
and I regret that space will not permit the republication of the many valuable papers 
and reports which were presented and the discussion that followed. 

There was the spirit of reform everywhere, even in the atmosphere. A few 
adhered to the old tenets and sounded a note of warning of the wrath to come, but 
the Committee on Statistics and Good of the Orders had inaugurated a movement 
that was not to be checked short of revolution. D. P. Markey, Chairman, immedi- 
ately the Congress organized for business, offered a resolution for his Committee : 

Resolved, That the incoming President of this Congress be requested to appoint a 
Special Committee of three to prepare minimum tables of rates upon the level and step 
rate plans and any modifications of the same which may seem to them desirable and 
commensurate with safety, and that said Committee report at the next session of 
this Congress. 

Resolved, That this Committee be authorized to employ actuarial assistance at an 
expense not to exceed five hundred dollars. 

D. P. Markey, Chairman. 

D. E. Stevens. 

B. F. Nelson. 

Dr. H. A. Warner. 

Dr. E. R. Hutchins. 

Julius M. Swain. 

J. G. Tate. 

F. A. Draper. 

F. W. Sears. 

W. T. Walker. 

Mr. Powers, of Illinois, immediately thereafter presented the following preamble 
and resoution and asked that it be considered in connection with the pending res- 
olutions 

Whereas, At the last session of this Congress a resolution was unanimously adopted 
in which it was declared to be the "imperative duty of the several Orders represented 
here to make, at the earliest practical date, proper provision for meeting the inevitable 
increase in the rate of mortality by an adjustment of rates so that contribution shall 
be equitably proportioned to the hazard at risk"; and, 

Whereas, The very able report of the Committee on Statistics and all the papers 
read before this Congress clearly indicate that it is the duty of this Congress to not only 
reaffirm its declaration of one year ago, but also to urge immediate action by the 
Societies in the direction of safety and perpetuity; therefore, be it 

Resolved, That it is the sense of this Congress that all of the Societies here rep- 
resented should immediately adopt such tables of assessments and changes in their 
laws as will provide ample income to meet both present andfuture mortuary demands, 
and a safe plan for investment of such accumulations as will insure the perpetuity of 
the organization. 

On motion, action upon the above resolutions was postponed for the present in 
order that they might be printed. 



49 

On the following day Past President Spooner proposed substitutes for both reso- 
lutions, which were adopted, as follows : 

Resolved, That the incoming President of this Congress be requested to appoint a 
Special Committee of three to prepare tables of rates Upon the level premium, the 
natural premium or step rate plan, and the step rate plan with such modifications by 
applying to a proper extent the principles of a reserve or emergency fund. 

Said Committee shall, so far as possible, secure and present to this Congress a 
comprehensive statement of the remedial changes which have been, or shall in the 
ensuing year be, adopted by any Fraternal Order, the object herein sought ,being the 
securing of such knowledge as shall be of value to this Congress in arriving at definite, 
safe and sound conclusions. 

Whereas, At the last session of the Congress a resolution was unanimously adopted 
in which it was declared to be the "imperative duty of the several Orders represented 
here to make, at the earliest practical date, proper provision for meeting the inevitable 
increase in the rate of mortality by adjustment of rates so that contribution shall be 
equitably proportioned to the hazard at risk" ; 

Resolved, That this Congress hereby reaffirms its declaration of one year ago. 

John Haskell Butler, Chairman of the Committee on Statutory Legislation, presented 
a lengthy and comprehensive report, from which I extract the following : 

Substantial gain has been made in extending the operation of the Uniform Congress 
Act. 

Our Uniform Law has during the year been adopted in the States of Missouri and 
Nebraska and by the National Congress as legislation for the District of Columbia. 

Even this progress, by no means satisfying the full measure of the wish and 
expectation of your Committee, was made only by the most diligent effort and in the 
face of serious opposing influences. 

In Missouri and the District of Columbia modifications of our Uniform Bill were 
yielded. 

The following clause was inserted in the Acts adopted : 

"Any such Fraternal Beneficial Association may create, maintain, disburse and apply 
a reserve or emergency fund in accordance with its Constitution or By-Laws." 

This zvas done not only because of a demand therefor, which, if refused, might have 
jeopardized success in obtaining the enactment of the law, but, in mew of the possibility, 
not to say probability, that many of the fraternities nozv associated in the Congress may, 
in the near future, adopt reserve fund provisions, it seems wise that statutory per- 
mission therefore should exist. 

The Committee ask that their action in this respect be endorsed, and recommend 
that the Uniform Bill be amended by adding this same provision to the end of Sec- 
tion i. 

The Missouri Bill also limits the right of the Commissioner to make inquiries out- 
side the special questions in the Act, to the statements in the Orders' reports to the 
department, and we recommend the Uniform Bill be amended accordingly. 

Although the field to which this particular statute is applicable is not extensive, 
it is believed that the fact that it was thus favorably regarded by the law-makers in 
the National Congress, representing all the States, would very materially assist in 
gaining for us recognition in those States where we are yet seeking legislation. 

In the State of New York some vicious attempts were defeated and a good amend- 
ment secured. 

In Wisconsin the Insurance Codification prepared by the Commissioner and a 
special commission appointed for the purpose, in its application to our system was so 
objectionable to fraternal interests that all who examined it must have deeply felt that 
it must not become law. 

Not to speak of all its features, that it should have grouped all classes of com- 
panies furnishing protection on the assessment plan within the same general pro- 
visions, was sufficient to condemn it. 

We have been and should continue to be tenacious, of having all laws govern- 



50 

ing fraternals embraced in one Act. There will then be no fear of the unexpected 
application of adverse requirements. 

Notwithstanding- the appeals to the Commissioner to endorse our Uniform Bill, 
he held rigidly to his own ideas, and pushed them with zeal and ability. It became 
necessary to resist with vigor. The value of combined effort and the solidifying in- 
fluence of the association of fraternities in this Congress has never been so grandly 
displayed as in the defeat of this measure. 

Colorado is another State wherein a hostile attack was made. A measure was 
introduced, designed, among other details, to require a deposit of money by the Orders 
doing business there. A splendid rally was made and the proposition met, as it de- 
served, ignominious failure. 

The legislation in the Province of Quebec remains unchanged. The Provincial 
authorities are not inclined to insist upon compliance with its provsions. They are 
investigating the subject of legislation adapted to the fraternal system with care. 
It is believed that before the authorities decide upon any further recommendations, 
"ample opportunity will be accorded us to present our views. 

The Congress Bill was introduced in Kansas, and little doubt was entertained that 
it would pass. A notion obtained, however, among the legislators that only repre- 
sentatives should legislate in our governing bodies, and that life membership and the 
conservative and preservative power of the official boards was injurious. It was the 
opinion of those in charge of the bill that an attempt to carry -it would result in having 
it so amended. It was therefore wisely abandoned. 

The legislation in New Jersey was not important as affecting our class of asso- 
ciations. 

Adverse legislation was offered in Texas, North Carolina and California and 
defeated. 

Thus we have given a resume of the achievements during the legisative session 
of 1897. 

There is much to encourage us in continuing to press the Uniform Bill. 

The paper prepared for distribution among the Representatives and Senators in 
Congress by Past President Boynton, presented as a brief to the committees here- 
after named, is a most able and convincing argument for our cause and the Uniform 
Bill. It served the purpose nobly. The committee annex the paper to this report, 
together with the reports of the committees of the House and Senate on the District 
of Columbia, to each of which it was attached, with the purpose of having it forever 
preserved in the records of the National Fraternal Congress. 

The Uniform Bill, as it now stands, with the provision relative to a reserve fund, 
hereinbefore recommended, is as satisfactory as we can perhaps make it. We shall, 
most probably, as our system and our experience in its development increases, wish to 
change or improve some of its provisions. 

The insurance departments are not hostile to' our fraternal efforts. The belief 
probably prevails in many of them that our plan of protection has defects. It is our 
conviction that any efforts which we may make to strengthen our methods will be 
encouraged and not retarded. It is not therefore wise to ask for any more than is 
essential, and the better policy will be to endeavor to create, rather than diminish, a 
feeling of mutual confidence between our Orders and the departments of insurance 
throughout the country. 

Not only for its forceful enunciations, but as a tribute to the memory of Major 
N. S. Boynton, I quote liberally from his "Brief submitted to the House Committee 
on the District of Columbia/ 1 to which reference is made by Chairman Butler: 

Gentlemen: I desire to submit to the committee some of the reasons why the 
representatives of the Fraternal Beneficiary Societies of this country ask the pas- 
sage of the bill entitled "A bill regulating Fraternal Beneficiary Societies, Orders or 
Associations in the District of Columbia." I would first call your attention to the 
fact that in 1886 a body was formed in Washington, D. C, and named the National 
Fraternal Congress. It was composed of representatives from the leading legitimate 
Fraternal Societies. One of the principal objects of the Fraternal Congress was to 
secure uniform legislation throughoul the country for their protection, such legisla- 
tion to be so framed as to protect the people from fake associations which were being 
organized in almost every State in the Union. 



51 

Up to 1893 every Association claiming to be fraternal and working under the 
lodge system were exempt from the operations of the insurance laws of most of the 
States ; hence hundreds of speculative Societies were formed. This the National Fra- 
ternal Congress sought to prevent, and has prevented by securing the adoption in a 
number of States of the Uniform Bill, which is presented to you for your consid- 
eration. 

The legitimate Orders and Associations are willing and desirous, through the 
legislation proposed, to come under the supervision of the constituted authorities 
of the District of Columbia. 

To make clearer, if possible, the reasons why the fraternal beneficiary system asks 
this special legislation, if it may be so termed, I submit the following : 

In this country we find three separate and distinct systems of life protection as 
follows : 

A. The "old line insurance or level premium system," with its endowment, ton- 
tine and semi-tontine features. The contract between the company and the insured is 
called a policy. Profit and gain is the controlling object. In every State laws are 
found on the statute books providing for their incorporation and governing their 
operations. 

B. The "open business assessment system/' The contract between the association 
and the insured with some is called a policy, with others a certificate. This system 
has no fraternal bond to cement it together. The associations comprising this system 
are purely business concerns, without a representative form of government, generally 
close corporations. In every State laws are found upon the statute books providing 
for their incorporation and supervision. 

C. The "fraternal beneficiary system" is composed of societies with a representa- 
tive form of government, with subordinate lodges and ritualistic work, furnishing 
financial assistance to living members in sickness or destitution, providng for the 
payment of its living members benefits in the case of total physical disability, arising 
from sickness or old age, and providing death benefits in the event of the death of 
a member for his family or dependent blood relatives. 

The lines of demarcation between these three systems are clear and distinct, and 
should be kept so in all legislative enactments. 

The objects of these Fraternal Orders or Associations, as incorporated in their 
fundamental laws, will be found substantially as follows : 

Xow I hold that the fraternal system is entirely different, separate and distinct 
from the old line or level premium system and the open business assessment system. 
Only those Societies, corporations or associations organized and carried on for the 
sole benefit of their members and beneficiaries, not for profit and gain, can be classed 
as legitimate fraternal beneficiary orders. 

The mutual agreement between the Fraternal Society and the member is not^ a 
policy or contract like that entered into between a life insurance company and its 
policy-holder. 

These beneficiary orders are cooperative bodies. The members mutually agree 
among themselves, through the laws of the order, enacted by their chosen repre- 
sentatives in the Grand or Supreme bodies, to protect each other and their families 
and dependents in case of sickness, disability or death by contributing a certain amount 
from time to time as required to provide for the payment of the sum specified in the 
certificate, or what one contribution would bring on the membership. No term en- 
dowment, tontine or any other form of speculative certificates are issued, neither can 
a certificate within the objects and purposes of a legitimate beneficiary order be made 
payable to the estate or the creditors of the member, nor can it be used as collateral 
for a loan to secure a creditor. 

Hence it will be seen that the fraternal beneficiary system is purely cooperative, 
non-speculative and mutual. These associations cannot be called insurance companies. 
They do not furnish purely life insurance, nor can they be classed with the open busi- 
ness assessment associations. There is nothing in common between the fraternal sys- 
tem and the other two systems. 

A few years ago another system was inaugurated with lodges and ritualistic work. 
The associations composing this system are known as endowment orders. Their ob- 
jects are purely speculative — to benefit the living, healthy member. In some cases they 
provide for sick benefits, but the real purpose is to give the living, persistent-paying 
member, at a certain time, the amount of money his certificate calls for. 



52 

A great many who do not understand thoroughly the objects and purposes of the 
fraternal beneficiary system have confounded it with the open business assessment 
system, when, in fact, there is nothing in common between the two. They have also, 
unintentionally, of course, classed the endowment associations with the fraternal sys- 
tem, when the facts are that the former have not from their inception ever been recog- 
nized by the latter. They have been denied representation in the National Fraternal 
Congress because their objects and purposes were foreign to the system which that 
body represents. 

There should be no friction between the old line insurance system, the open business 
assessment system, the endowment system and the fraternal beneficiary system. The 
business of the other systems has not suffered by reason of the fraternal beneficiary 
orders. On the contrary, the business of the old line companies, as shown by their 
annual reports, has increased more rapidly since the advent of the fraternal societies 
than ever before. 

The reason for this is simply because the fraternal beneficiary societies are pio- 
neers and educators. Tens of thousands of men and women join them and secure 
protection for those dependent upon them who could not afford to pav the cost of 
life insurance. They attend lodge meetings, discuss the principles of life protection, 
get interested in the proceedings of the lodge, see the benefits which their own dis- 
abled members and the widows, orphans and dependents of deceased members receive 
by reason o£ such membership, and also become thoroughly familiar with all the de- 
tails of the business part of such organizations. 

Men in this country, where wealth frequently changes hands, do not always remain 
poor or even in moderate circumstances. The wheel of fortune frequently brings 
them to the top, and then they can afford to purchase life insurance from the old line 
companies at the higher price. 

They cannot get it in blocks of ten, twenty, fifty or one hundred thousand dollars 
from the fraternal societies, but having been thoroughly educated in the lodge room 
to realize the value of life protection, the old line life insurance agent can secure an 
application from them for a large amount of either ordinary life insurance or endow- 
ment insurance much easier than if they had never been members of a fraternal 
society. 

As poverty is said to be the mother of crime, we believe that the protection thrown 
around American homes by the fraternal beneficiary system, now so strong in our 
country, has been instrumental in reducing crime. It certain^ has reduced pauperism. 
Members of these orders do not become applicants for public charity. The fraternal 
ties that bind them together guarantee financial assistance in time of need. 

As the fraternal beneficiary system has grown to be a power for good in our 
country, its friends and promoters believe that favorable legislation should be given it. 

The uniform bill which has been submitted to you for consideration has been pre- 
pared by some of the best legal talent in the country, and after several years' careful 
consideration by the National Fraternal Congress itself. We feel that you will, after 
a thorough investigation, be convinced that it ought to pass and become a law in the 
District of Columbia. 

Tt has been adopted by Michigan, Illinois, Iowa, and in New York, Massachusetts, 
Wisconsin, Minnesota and several other States with some minor changes. Our simple 
desire is to secure uniformity of stautory legislation throughout the United States. 

No man connected with the Fraternal System possessed greater power in logical 
argument or more personal magnetism than Major N. S. Boynton. No man con- 
nected with the System had the influence in impressing upon the members of Fraternal 
Beneficiary Societies, and the public at large, including legislators, judges and in- 
surance commissioners, His personal convictions concerning the distinguishing dif- 
ferences between what he was pleased to call "The Three Systems of Life Protec- 
tion." The imprint of his thought, is found in the reports of committees to the Con- 
gress, in legisativc enactments and in decisions of courts of last resort. 

Major Boynton was no less a master in ridicule and satire than in forceful argu- 
ment, as the writer has good cause to know. 

How unfortunate that this great and good man planted seeds which produced 
thorns and thistles ! Not until he had sown broadcast and grown a great harvest of 



53 

I erroneous ideas did he realize the untoward work that he had done ! Well do I re- 
member that night in Luddington, ten years later, when I had been furnished a cot 
in his bedroom that we might "lay at our ease for an undisturbed conference concern- 
ing the coming conflict with the boys on the morrow !" For years he had been my 
severest critic, but now by telegram he had summoned me to come to his aid in 
steering the old ship into a new channel. That night he opened up his heart to me 
and whatever of unfriendly feeling that I had ever entertained melted into regard 
and sympathy. He regretted his age because he could not start afresh in the reforma- 
tions that he clearly recognized as of pressing necessity. He encouraged me to con- 
tinue to do my utmost in undoing what he had done. He may have likewise un- 
bosomed himself to others, but not to my knowledge. His change of opinion appeared 
complete and he largely credited the change to the recent progressive position taken 
by Mrs. Francis E. Burns and her asociates in pressing reforms upon the Ladies of 
the Modern Maccabees. He said that it was Mrs. Burns who first caused him to stop 
and think of the serious situation into which he had brought the Knights. With all 
of his positive assertions and all of his dogmas publicly proclaimed and generally 
accepted, Major Boynton failed to comprehend the fundamental principles underlying 
mutual insurance protection until near the close of his brilliant career. For many 
years he labored under the conviction that ithe payment of $1,000 as a "benefit" was 

i different from $1,000 paid as "indemnity," and that the business method to assure 
the certain payment of the indemnity was not necessary to guarantee the benefit. This 
conviction resulted from his original conception (for he was one of the Fathers of 
Fraternity) of the "Benefit" as a "Charity" or "Benevolence," and his belief that the 

I hearts of the people would continuously and forever move them to make "donations" 
to satisfy the demands of Charity. He had a sad awakening to the reality that "cold 
business plans" were required to make possible of performance the promise to pay a 
designated sum of money, whether or not it be called a "Benefit" or "Indemnity." 

"Experience teaches a dear school," and Major Boynton and many others would 
learn in no other. 

The Constitution and Laws of the Congress were amended to conform to the text 
of the Uniform Bill, declaration 4 being as follows : 

Fourth. — No fraternal society, order or association shall be entitled to repre- 
sentation in this Congress unless such society, order or association be formed or or- 
1 ganized and carried on for the sole benefit of its members and their beneficiaries, and 
not for profit, having a lodge system, with ritualistic form of work and representative 
form of government, and making provision for the payment of benefits in case of 
death (with provision, if its laws so provide, for the payments of benefits in case of 
sickness, temporary or physical disability, either as the result of disease, accident or 
old age, provided the period in life at which payment of disability benefits on account 
of old age commences shall not be under seventy years), the fund for the payment of 
such benefits and the expenses of such association being derived from assessments or 
dues collected from its members, and death benefits payable to the families, heirs, 
blood relatives, affianced husband, or affianced wife of or persons dependent on the 
member ; these principles being an obligated duty on all the members, to be discharged 
without compensation or pecuniary reward, the general membership attending to the 
general business of the order, and a fraternal interest in the welfare of each other a 
duty taught, recognized and practiced as the motive and bond of organization. 

The Twelfth Annual Session of the National Fraternal Congress was held in 
Baltimore, November 15, 1898, and is memorable from the report of the "Committee 
on Rates" submitting a "Table of Mortality" and contribution rates deduced there- 
from. This committee was composed of H. C. Sessions, Chairman; F. A. Draper and 
D. P. Markey. President James E. Shepard was a member ex officio. The Mortality 



54 

Table (modified as hereafter explained) is now widely known as the "National Fra- 
ternal Congress Table of Mortality/' and has been made by many States a standard 
for valuation as well as for minimum contribution rates. Concerning the Mortality 
Table the committee said : 

The Mortality Table hereinafter presented reflects the judgment of the committee, 
based as it is upon actual deaths, as being as low as possible, keeping in view safety 
and the minimum number of assessments contemplated by the table of rates. 

The mass of data from which this Mortality Table is adjusted is so extensive that 
the conclusions reached have ample support as to its sufficiency. It can be applied to 
new business and old business at attained ages, when the latter is in good physical 
condition. Should such old business be below the average, then such impairment 
must be provided for by an addition to the rate of the table. 

The Mortality Table as reported and published in 1898 had a defect due to arith- 
metical errors in the derivation of the columns of living* and dying from the column 
of the probabilities of dying. There was also an abruptness of gradation at ages 44-45, 
which needed adjustment. I had no part in the construction of the original table, but 
I did present to the Chairman of the committee a regraduation of the probabilities of 
dying for ages above 40, which changed the number living and dying above age 44, 
and ended the Table at age 98 instead of age 99. This suggested change was adopted 
by the committee as the reconstructed Table (above age 40) reported to the Congress 
in 1899, and this is the one now known and accepted as the National Fraternal Con- 
gress Table of Mortality and which appears in this book. The committee submitted 
tables of contribution rates on the "Level Rate Plan," the "Step Rate # Plan" and the 
"Modified Step Rate Plan." These several "Plans," with explanations by the com- 
mittee, follow : 



Level Rates. 

This table shows the lowest rates that can be deduced from the Mortality Table 
above. The full amount must be collected annually, and the portion not used to pro- 
vide for current mortality must be invested at 4 per cent interest. The annual rate is 
calculated on the basis that the full amount is paid at the beginning of the year. The 
monthly rates are increased slightly to provide for the loss of interest due to that 
method of payment and the slightly less amount contributed by dying members. 



Age. 



Annual. 



Monthly. 



Age. 



Annual. 



Monthly. 



21 


$10.62 


$ -93 


4i 


$20.93 


$1-83 


22 


10.92 


.96 


42 


21.80 


1. 91 


23 


11.24 


.98 


43 


22.72 


1.99 


24 


11-57 


I.OI 


44 


2369 


2.07 


25 


11.92 


1.04 


45 


24.72 


2.16 


26 


12.28 


1.07 


46 


25.81 


2.25 


V 


12.67 


1. 11 


47 


26.91* 


2-35 


28 


13.08 


1. 14 


48 


28.20 


2-45 


29 


I35I 


l.lcS 


49 


2951 


2.58 


30 


13.96 


1.22 


50 


30.98* 


2.71 


31 


14-43 


1.26 


51 


32.39 


2.83 


32 


14.94 


I.3I 


52 


33.97 


2.97 


33 


15-47 


1.35 


53 


36.65 


3.12 


34 


16.03 


1.40 


54 


37-45 


3.28 


35 


16.62 


1.45 


55 


3936 


3.44 


36 


17.24 


I.5I 


56 


41.41 


362 


37 


17.90 


1.57 


57 


43.60 


3-88 


38 


18.60 


i'63 


58 


45-94 


4.02 


39 


19-34 


1.69 


59 


48.45 


4.24 


40 


20.11 


1.76 


60 


5I.I3 


4-47 



*Should be $26.97 and $30.90. 



55 

Step Rates and Modifications. 

Column i gives the age groups. Column 2 gives the annual rates for the natural 
step-rate to age 61, and level rate from that age for the balance of life. Column 3, 
the monthly rates, as derived from the annual rates with allowance for slight loss due 
to the method of payment. These two columns are the basis for calculating columns 
4 and 5. Column 4 shows a modification of the natural step-rate by means of an 
accumulation of 15 cents per month, which is used to reduce the level cost from age 
61 to $3.00 per month. Column 5, a similar modification, but with an accumulation 
of 30 cents per month, and a level cost from age 61 to $2.50 per month. Under either 
of these plans all members pay the same rates at the same attaind ages. The purpose 
in view in these tables is to have a plan that requires but little detail in its operation, 
so as to be readily comprehended by the officers of the local lodges. 



I 


2 


3 


4 


5 


Ages. 


Annual. 


Monthly. 


Monthly. 


Monthly 


21-25 


$ 5.H 


$ 45 


$ .60 


$ .75 


26-30 


540 


.48 


.63 


78 


31-35 


5-93 


•52 


67 


.82 


36-40 


6.71 


•59 


•74 


.89 


41-45 


8.14 


72 


.87 


1.02 


46-50 


10.25 


.90 


1.05 


1.20 


51-55 


1382 


1.21 


1.36 


I.5I 


56-60 


19.60 


1.72 


1.87 


2.02 


61 


54.01 


473 


3.00 


2.50 



Accumulation Table. 

The step-rate plan, as shown in Column 2, Table, can be modified to meet the 
necessities of different societies by varying the amount of the accumulation. The 
following table is submitted as a basic table for that purpose. It shows how an accu- 
mulation of $1.00 per annum, paid in monthly installments, may be used to reduce the 
level cost after age 61, from the level rate of $54.01. The table shows the amount 
of such reduction, based on age at entry, giving to each member the full benefit of the 
term of membership. Thus the member entering at 21 would secure an annual reduc- 
tion of $11.61, giving an annual cost from age 61 of $42.40. The member entering at 
36 would secure a reduction of $4.71, giving annual cost from age 61 of $49.30. The 
adjustment of annual cost after age 61 would only have to be made when the mem- 
bers reach age 61, the rates being the same for same attained ages from 21 to 60. 

With this table as a basis, the annual accumulation necessary to secure greater 
reductions can be calculated. If the accumulation was $2.00 per annum, the reduc- 
tion would be twice that of the table, and so in proportion for any other amount 
of accumulation : 

At age 61 the level rate is 54.01. 

At each age at entry $1.00 per year additional to natural step-rate paid as a special 
accumulation will give the following annual reduction from age 61. 



Age. 


Reduction. 


Age. 


Reduction. 


Age. 


Reduction 


21 


$11.61 


3i 


$6.52 


4i 


$3.28 


22 


11.00 ■ 


32 


6.13 


42 


3.03 


23 


10.41 


33 


575 


43 


2.79 


24 


9.85 


34 


5-39 


44 


2.55 


25 


9-30 


35 


5.04 


45 


2.33 


26 


8.80 


36 


471 


46 


2.13 


27 


8.30 


37 


4.40 


47 


1-93 


28 


7.82 


38 


4.10 


48 


1-74 


29 


7-36 


39 


3.81 


49 


1.56 


30 


6-93 


40 


3-53 


50 


1-39 



The Table of Level Rates, as published in the proceedings of the Congress for 
1898, 1809 and 1900, and produced above, have been copied widely, and are found in 
1913 editions of publications issued by the Fraternal Monitor and the American Service 
Union, and in the constitution and laws of several Fraternal Orders. 



56 

It is unfortunate that the monthly rates are not accurate for ages above 45, having 
been obtained by the approximate method of multiplying the annual rate by the frac- 
tion .0875. 

The annual rates do not vary more than one cent from the correct rates, excepting 
at age^ 47 and 50, where the rates should be $26.97 and $30.90 instead of $26.91 and 
$30.98 respectively, as printed in the three reports for 1898, 1899 and 1900. 

The correct annual and monthly level contribution rates appear amongst the tables 
in this book. 

It is also unfortunate that the committee failed to state in the explanation that the 
level rates were net and intended to provide for $1,000 death benefit only, payable at 
death in one sum, and that contributions continued until death. 

One Society adopted them as gross rates, while another adopted them with the 
provision that the contributions would cease at age 70. A third adopted them to 
provide for $1,000 payable in one sum at death, or $1,000 payable in ten equal annual 
installments in event of permanent total disability, or $1,000 payable in ten equal annual 
instalments as an old age benefit, the first instalment being due and payable at age 70. 
The officials of the three societies were surprised when informed that the rates were 
inadequate for the benefits promised. They had "taken them from the Proceedings of 
the National Fraternal Congress." 

The Congress of 1898 referred the Mortality Table and the Table of Rates to the 
succeeding session. 

In 1899, at Chicago, the Special Committee on Rates, H. C. Sessions, D. P. Markey 
and James E. Shepard, again reported the Mortality Table (regraded and adjusted 
as heretofore stated) and the Rate Tables. Following paragraphs are taken from 
the report : 

The committee has, during the past year, spent much time and study upon the 
question submitted to it by the Congress. It has had opportunities for extending its 
research somewhat, as new data have been compiled of the actual experience of th: 
fraternal orders, members of this Congress, which were not available one year ago. 
After a careful and painstaking investigation of both the old and new data, nothing 
has been disclosed that would lead the committee to alter the mortality table sub- 
mitted as a standard or guide for this Congress in determining the probable mortality 
to be expected from any order under normal conditions. 

The committee desires to say that the net level rates and the step-rate plans four 
and five submitted in its report of last year were submitted not as rates or plans to be 
adopted by the Congress, but in compliance with the direction of the Congress to 
submit net level rates and a step-rate plan based upon the mortality table. The mor- 
tality table could be adopted as a standard of mortality without adopting either plan 
of rates submitted, or without giving its preference for either a reserve or a step- 
rate plan, or the particular rates submitted by the committee, which were substituted 
as illustrations of both systems. 

There are several level premium plans, also several different modifications of the 
natural premium or step-rate plan already in use by different orders, members of this 
Congress, but with no recognized standard by which the officers of either plan may 
try them for the purpose of determining the sufficiency of their rates, which can only 
be measured accurately by means of a mortality table. 

The only recognized standards in this country are the Actuaries, and the American 
experience tables of mortality. The Congress, imbued with a belief that both the 
above tables were higher than the actual experience of selected lives would disclose, 
appointed this committee to investigate and report a mortality table based upon the 
average experience of the fraternal orders, and the same was embodied in its report 
one year ago and was considerably less in all ages below the age of 76 than either 
of the above tables. 

In constructing the mortality table submitted to the Congress it was the aim of 
the committee to reflect as near as possible the actual death experience to be ex- 
pected of each age under normal conditions of selection, and thus furnish an accurate 
standard from which rates might be constructed with safety, or by which an order 
already in existence might adjust its rates if it so desired. It is a well-known fact 
to the committee that the death experience of different orders vary from the standard 
submitted. Manv seem to liave had a more favorable experience, while others may 
have encountered a higher cleat li experience than the table submitted. The fact that 
some orders have, in the past, encountered a higher death experience than the table 
-^oes not prove that the table is too low, but rather that the high death rate in them 



57 

is due to fault of plan or management, or both, and the experience of such orders may 
be safely classed as exceptional, rather than as establishing a general law by which all 
orders should be governed. It would hardly be correct to conclude that because sixteen 
old line life companies had failed to each one that is still doing business in this country, 
that their failure was due to the mortality table upon which their rates were based 
being too low. 

Neither is it safe to conclude that the mortality table submitted by this committee 
is too high, if it is found that the death experience of a majority of the orders' mem- 
bers composing the Congress have so far shown a lower experience than the table 
indicates. It will be found upon examination of such orders that during their early 
years of history there has been a continual growth, and each will be found with a 
much larger percentage of membership still within the limit of the benefit of careful 
medical selection in proportion to total membership, than such orders will be able 
to maintain with a continually increasing membership. With a small membership 
a 25 per cent increase is easily obtainable, but with a large membership the per cent is 
more likely to fall below 10 per cent. 

As it is impossible to measure in advance the amount of new business that any 
order is likely to secure, it will be readily seen that the factor of new business and the 
modifications the presence of such new business will have upon current death rate 
of both old and new members as one group or mass must be eliminated from the 
mortality table. It is a well-known fact that the per cent of new business varies in 
most of the orders each year and the per cent varies as between the various orders 
each year. 

There is a point of measurement of the actual mortality of the orders, common 
to each, and the aim of the committee has been to submit a table of mortality that 
would give, as near as possible, the actual death experience to be expected at each 
age of members who have been such a sufficient time to be removed from the benefit 
of medical selection. The committee having reached the conclusions above expressed, 
its aim will be to explain to the Congress the mortality table and the different tables 
of rates submitted. 

Your committee would suggest as the first and important question in this connec- 
tion : Is it desirable for the Congress to adopt a standard? If for no other purpose 
is it not desirable that the different orders, members of this Congress, which desire 
to place their business upon a safe and permanent basis, should have a standard by 
which to measure the past and future experience, and, if necessary for safety, conform 
to that which is required? This latter reason should, it seems to your committee, 
be sufficient to require of the Congress a safe and reliable standard. 

Then, again, does not this danger confront all of the fraternal orders? If the 
Congress fails to adopt a standard, do we not leave the door open, and thereby invite 
the several insurance departments in different States to fix a standard for the orders, 
as has already been done in the Province of Ontario, which law went into force 
June 30, 1898? 

The death rate in the lower ages of any order will always be somewhat in pro- 
portion as the new business is to the members in those ages not affected by the medi- 
cal examination. As, for instance, with only 10 per cent of the members not yet re- 
moved from the benefits derived from medical examination, the death rate would be 
greater than if the volume of new business was 50 per cent at such ages. 

The foregoing indicate a few of the many reasons why the mortality table sub- 
mitted might be correct and still not agree with the actual death experience of many 
orders as reflected or ascertained by combining both old and new business, and the 
same reasons will explain why different orders with about the same membership, but 
differing in the per cent of new business, experience different death ratios. 

The problem set forth in the preparation of the following table involved the basis 
of a minimum rate with the elimination of cash, paid up and extended values. For a 
new order, starting with fresh lives and careful selection, it is believed the table pre- 
sents ample basis when combined with three or three and one-half per cent rate of 
interest. The mass of data from which this mortality table is adjusted is so extensive 
that the conclusions reached have ample support as to its sufficiency. It can be applied 
to new business and old business at attained ages, when the latter is in good physicial 



58 

condition. Should such old business be below the average, then such impairment 
must be provided for by an addition to the rate of the table. 

On motion of Mr. Markey the report of the Special Committee was unanimously 
adopted. On motion of Mr. Stevenson the following resolution was unanimously 
adopted : 

Resolved, That the Mortality Table presented by the Committee on Rates be recom- 
mended by this Congress as a proper guide for the adjustment of rates. 

In 1900, at Boston, the National Fraternal Congress unanimously adopted the 
following resolution offered by Mr. D. D. Aitken, Chairman of the Committee on 
Rates : 

Your committee, to whom was referred all matters pertaining to rates, would most 
respectfully report: 

That, in its judgment, this Congress should recommend to the law-making power of 
all States and Provinces in the enactment of laws that will require all Fraternal Bene- 
fit Societies thereafter organized and not theretofore admitted to do business therein, 
to adopt rates not lower than is demonstrated to be necessary by the following mor- 
tality table, adopted by this Congress at its last meeting: 

The Mortality Table (as published in this book) is then given, and the Committee 
continues : 

Your Committee further recommend that the rates deduced from this Mortality 
Table and prepared by your Committee on Statistics, which are as follows, be 
recommended to the consideration of the States and Provinces as proper rates for 
the level-premium and step-rate plans where no scaling of certificates is made. 

Then follows the tables of level premiums and step rates heretofore given. 
Returning to the Proceedings of the Congress at Baltimore in 1898, I extract the 
following from the report of the Committee on Statutory Legislation : 

In the Province of Quebec the law requires a deposit of $5,000 with power of 
demanding an increase thereto from time to time, and has other objectionable features. 
The chairman of your committee had a personal interview in Quebec with the pro- 
vincial authorities, and it is believed that with united effort a material modification 
can be obtained, and probably the main features of our uniform law adopted. 

Virginia has passed a Fraternal Act in the lines of the uniform law. 

In Georgia, a law, which on the face applies to assessment insurance, with a hos- 
tile administration of the Insurance Department, might be held applicable to Fraternal 
Orders. The present Commissioner does not so apply it. It would be wise to make 
the effort to have the exemption put in the law. 

In Kentucky, legislation which was not satisfactory to our brethren was defeated. 
We are advised that the Uniform Bill can be secured there. 

An attempt was started in Ohio to repeal the present law, the Uniform Bill, but 
was abandoned. 



The Committee on Statutory Legislation reported to the Congress at Chicago 
in 1890 that the Parliament of Ontario had passed an Act that, in effect, denied 
Societies of the United States the privilege of doing business in that Province; that 
the effort to secure a law in Quebec failed and that the requirement of a deposit of 
$5,000 was still in effect; that a bill passed the North Carolina Legislature on the 
line of the Uniform Bill, and that the Uniform Bill was adopted in Indiana and Kan- 



59 

sas. That a bill failed of passage in Oregon due to a division amongst the Fraternal 
Societies. 

The provision of the Act of Ontario was as follows : 

Unless the Society provides for its contracts upon lives at least to the extent of 
collecting from its members premiums not less than those set out in Schedule A, 
and such further sum as is sufficient to provide for the expenses of management, it is 
not admissible to register. 

Another provision was as follows : 

No company, Society, Association or organization incorporated after the tenth 
day of March, 1890, under Chapter 172 of The Revised Statutes of Ontario, 1887, or 
under Chapter 211 of The Revised Statutes of Ontario, 1897, shall undertake or effect 
or agree or offer to undertake or effect any contract of insurance within the mean- 
ing of Section 2. 

The rates of Schedule A are known as the Hunter rates and are approximately the 
same as those recommended by the rate committee to the National Fraternal Con- 
gress. Dr. Oronhyatekha, as President of the National Fraternal Congress in his 
address in 1900 at the Boston session, set out in full for comparison the level-premium 
rate according to the National Fraternal Congress Table and according to those known 
as the Hunter rates and also those known as Blackadar's rates. Quotations will here- 
after be made from Dr. Oronhyatekha's address and the schedules will be given in 
that connection. 

History along the line of adequate rates was making rapid progress by the time 
of the fourteenth annual session of the National Fraternal Congress held in the 
city of Boston, August 28, 29, 30 and 31, 1900. The Committee on Credentials began 
to play its part in this drama by recommending the following : 

Your Committee have become satisfied from an examination of some of the so- 
cieties applying for admission that their rates of assessment are inadequate to pro- 
vide for the benefits provided in their laws, but the Constitution of the Congress 
has no requirement or standard upon this point. We, therefore, recommend that 
the Committee on Constitution and Laws formulate and present for adoption at this 
session a provison which will enable this Committee, to refuse admission to future 
applicants for admission to the Congress, when it is evident that their table of rates 
is clearly inadequate to provide for the successful carrying out of their contracts with 
their members. 

A resolution to the above effect was adopted by the Congress. In the report of 
the Committee on Conference with the Insurance Commissioners the following appears : 

In the course of its deliberations the joint committee spent a great deal of time in 
discussing the ever-present question of adequate rates in Fraternal Benefit Society 
business. The members of the committee representing the Insurance Departments 
insisted that their interest in all matters pertaining to the business of these societies 
was founded solely in the commission which they hold from the people of their re- 
spective States, empowering and directing them to protect their citizens, whose 
patronage is solicited by these societies, from the danger of imposition or loss arising 
either from intentional imposition or from inherent weakness or defects of the system. 
These superintendents seem to be unanimous in their opinion that the assessment 
rates in most of these societies are now fixed at a point below the normal cost of 
insurance, and that these rates, in the absence of further provision, are not adequate 
to successfully meet the obligations in the certificates issued to the members, and they 
insist that this constitutes an inherent weakness in the system which they are 
bound constantly to call attention to in the discharge of their obligations to the people 
of their States. 

The joint committee was unanimously of the opinion that it would be imprac- 



60 

ticable to insist by statute on any arbitrary rate of assessment for societies already 
organized and doing business, but it was the consensus of opinion in the committee 
that legislation might wisely be sought restricting societies hereafter organized, or 
seeking admission, to transact Fraternal Society business to a minimum rate of assess- 
ment per annum for benefits promised. And it was decided to recommend, both to 
the Fraternal Congress and to the National Association of Insurance Superintend- 
ents, that they jointly favor and encourage such legislation whenever and wherever 
practicable. Believing that such legislation would be extremely valuable to our 
societies in preventing unfair competition by newly organized societies offering in- 
ducements which long experience has convinced us can never be realized, and feeling 
that the effect of intelligent discussion of these subjects, both in and out of the 
Legislature, is toward a final determination desirable alike to the public and the 
Fraternal Beneficiary system, we advise the adoption of the recommendation by the 
Congress. 

The Committee on Conference reported concerning the discussion of many other 
subjects, including the following: 

The joint committee next took up the question as to whether or not societies 
should provide in the face of their certificates for the payment of a certain sum or a 
sum contingent upon the amount raised from one assessment. This has been a 
most prolific source of controversy between the societies and the - departments. In 
Massachusetts and other Eastern States the departments hold that a Society depend- 
ing for its mortuary fund upon the contributions of its members and having no capital 
stock as a basis of absolute promise, has no right to make any except a conditional 
promise of benefits ; while in Missouri, Indiana and other Western States the de- 
partments have held exactly the reverse, laying out of sight the theory which is at 
the foundation of the business and placing their decisions upon the ground that the 
citizens of their States, whose interests they are safeguarding, should be told on the 
face of the contract to a definite certainty how much money that certificate will 
produce in case of their death. Your Committee believes that the construction by 
the Eastern States is the correct one, and that as the plan of raising funds to pay 
certificates depends absolutely on the voluntary payments of the members, that all 
promises made in reliance upon such contingent collections must of necessity be 
contingent promises, no matter what the form of words used in the face of the 
certificate may be. 

I make the following excerpts from the address of President Oronhyatekha. Dr. 
Oronhyatekha was the head officer of the Independent Order of Foresters in Toronto, 
Ontario, and known as one of the ablest men of the Congress, and yet seriously he 
made the following statements to a body of intelligent men : 

A commercial insurance company is formed in the first place to earn money for 
the directors and other shareholders and in the second place to give insurance bene- 
fits to its members or policy-holders. In other words, commercial insurance companies 
are organized and worked on the same principle as a sawmill, a flour mill or a 
cotton or other factory, viz. : to earn certain profits on the investments made by the 
owners. I apprehend I am not departing from the truth when I say that the directors 
and other owners of mills and factories never spend any sleepless nights thinking 
how best to promote the interests of the consumers. Their concern is more apt 
to be centered on the profits that can be legitimately made out of their mill or factory. 

A Fraternal Benefit Society, on the other hand, is formed to give insurance and 
other benefits to its policy-holders or members at the lowest possible cost consistent 
with safety and permanence without the remotest thought of any profit for directors 
or shareholders. They are therefore more like public schools, hospitals or charities, 
which are organized and carried on to do the greatest good at a minimum cost, but 
absolutely without profit or gain to anyone, except to the scholars and other bene- 
ficiaries of the educational or other institutions of a civilized nation. 

Dr. Oronhyatekha then gave comparative tables as follows : 



61 



WHOLE LIFE NET LEVEL RATES PER $1,000 AT 4%. 
Death Benefit Only. 













Blackadar 


Entry- 


— N. F. C. E 


— Hunter Rates — 


Annual 


Age. 


Annual. 


Monthly. 


Annual. 


Monthly. 


Rates. 


20 


$10.34 


$0.90 


$10.55 


$0.90 


$10.03 


21 


10.62 


•93 


10.91 


•93 


10.32 


22 


10.92 


.96 


11.28 


.96 


10.62 


23 


11.24 


.08 


11.66 


•99 


10.93 


24 


11-57 


1. 01 


12.03 


1.02 


11.26 


25 


11.92 


1.04 


12.42 


1.05 


1 1. 61 


26 


12.28 


1.07 


12.76 


1.08 


11.97 


27 


12.67 


1. 11 


13.12 


1. 11 


12.36 


28 


13.08 


1.14 


13-49 


1. 14 


12.76 


29 


13.51 


1. 18 


13.87 


1.18 


13.19 


30 


13.96 


1.22 


14.31 


1.21 


13.64 


31 


1443 


1.26 


14.76 


1.25 


14.11 


32 


14.94 


1.31 


15.22 


1.29 


14.61 


33 


1547 


i.35 


15.73 


1-33 


15.13 


34 


16.03 


1.40 


16.25 


1.38 


15.69 


35 


16.62 


i.45 


16.82 


143 


16.27 


36 


17.24 


1.51 


17.42 


1.48 


16.89 


37 


1790 


i.57 


18.05 


1.53 


17.54 


38 


18.60 


1.63 


18.71 


1.59 


18.22 


39 


1934 


1.69 


19.42 


1.65 


18.95 


40 


20.11 


1.76 


20.18 


1.71 


20.53 


41 


20.93 


1.83 


20.97 


1.78 


21.38 


42 


21.80 


1. 91 


21.81 


1.85 


22.29 


43 


22.72 


1.09 


22.70 


1.93 


23.25 


44 


23.69 


2.07 


23.65 


2.01 


24.27 


45 


24.72 


2.16 


24.66 


2.09 


25.39 


46 


25.81 


2.25 


2572 


2.18 


26.49 


47 


26.97 


2.35 


27.31 


2.32 


27.71 


48 


28.20 


2.45 


28.10 


2.38 


28.09 


49 


2951 


2.58 


29.36 


2.49 


30.36 


50 


30.90 


2.71 


30.72 


2.61 


31.81 


51 


32.39 


2.83 


32.17 


2-73 


33-35 


52 


33-97 


2.97 


33.71 


2.86 


35.00 


53 


35-65 


3.12 


35-34 


3.00 


36.74 


54 


3745 


3.28 


37.07 


3.15 




55 


39.36 


3.44 


38.94 


330 




56 


41.41 


3^2 




.... 




57 


43.60 


3-88 








58 


45-94 


4.02 








59 


48.45 


4.24 








60 


5I.I3 


4-47 









NOTE. — The monthly rates at the older ages are too low, as hereinbefore explained. See correct N. F. 
C. monthly rates in tables of this book. In the schedules published the annual rates at ages 47 and 50 are 
given as $26.91 and $30.98. The above are correct. 



The National Fraternal Congress Rates are those reported by the Special Commit- 
tee on Rates as heretofore published. The Hunter rates were prepared by J. Howard 
Hunter, Superintendent of Insurance of Ontario. The Blackadar rates were prepared 
by A. K. Blackadar, Actuary of the Dominion Government at Ottawa. 

Before the session of the National Fraternal Congress of 1901 there had been 
organized The Associated Fraternities of America at a meeting held in Chicago on 
January 21, of 1901. The reason for the organization is found in the 3rd and 4th 
paragraphs of the declaration of principles, which read as follows : 



62 

We hereby declare our uncompromising opposition to any and all legislation which 
would tend to restrict the rights of the membership of our society to self-government, 
and denounce as unwise, unfair and against public policy any statutory enactments 
for government and control of fraternal associations which do not apply expressly 
to all societies with equal force and effect. 

We further declare that we believe all societies should charge adequate mortality 
rates for their promised benefits, and while we disclaim any attempt to curtail the 
rights of the membership of any association, to organize their beneficiary department in 
such form and conduct the same in such manner as to them shall seem most conducive 
to their happiness and welfare, we courteously and earnestly recommend that each 
association study its own system and experience to the end that the association will be 
able to collect from its contributions sufficient to insure safety and permanency. 

The sentiment of those who organized the Associated Fraternities of America 
was voiced by Mr. Edwin M. Johnson in a well digested and forceful, address. Mr. 
Johnson quoted at length from the resolutions passed by the National Fraternal Con- 
gress and the reports of the Committee on Conference (heretofore given in part), and 
then summed up his protest and criticism as follows : 

Strange it did not occur to our brothers that new orders having a plan so much 
stronger than the plan of old orders, and practicing what the old orders professed to 
believe but did not practice — being, therefore, a creation so different from themselves — 
might not desire a membership. Especially should such a membership be desired among 
a class of orders that would apply a measure so different to new entrants from that 
which they apply to themselves — and especially, further, when those with whom they 
would affiliate would carry their requirements to the length of not only legislating 
rates, but other conditions that the young order must comply with which they did 
not propose to comply with themselves. Why should the young and healthy orders 
join their influence with the old orders and cooperate thereby to make laws and con- 
ditions against personal interest? 

Many of the old orders have for years talked themselves and their members into 
a position of believing in low rates, desiring, of course, to present the thought that 
their own rates were the lowest. They always contended that their rates would 
always be the lowest, until Nature forced them to admit the contrary. They still 
believe in the benefit of talking "cheapness." To enable them to successfully do this, 
they would today, after more than a quarter of a century of experience and wrong 
practice, legislate the "competitor" into a position of having to collect a higher rate 
than the assessment of the older orders, even after the increased burdens they have 
loaded onto them. 

It was difficult to defend the position that adequate rates should be applied to new 
organizations and not applied to the new members of old organizations, and as we 
shall see later on, Mr. Markey offered a resolution that all societies should adopt 
adequate rates by 1905. 

The meeting in Chicago was a preliminary meeting for the organization of the 
Associated Fraternities of America, the first annual meeting being held in July, 1901, 
at Cambridge Springs, Pa. The following is a list of the Societies represented at that 
meeting: 

Ancient Order of Gleaners. Fraternal Army of America. 

Ancient Order of Red Cross. Fraternal Tribunes. 

American Catholic Union. Grand Fraternity. 

Brotherhood of American Yeomen. Highland Nobles. 

Bankers' Fraternal Union. Home Guards of America. 

Daughters of Columbia. Knights of Kadosh. 

Fraternal Brotherhood of the World. Knights and Ladies of Columbia. 

Fraternal Bankers' Reserve. Loyal Mystic Legion of America. 



63 



Mystic Workers. 

Mutual Protective League. 

Mystic Toilers. 

Modern Tonties. 

Modern Brotherhood of America. 

Modern Order of Praetorians. 

Missouri Fraternal Congress. 

National Protective League. 

Order of Americus. 



Order of Washington. 

Royal Circle. 

Royal Fraternal Union. 

Sons and Daughters of Justice. 

Societies Des Artisans. 

The Chevaliers. 

The Fraternal Censor. 

United Moderns. 

Utopian Brotherhood of America. 



Mr. Lee W. Squier was Chairman of the Committee on Jurisprudence and Legisla- 
tion, and from his appointment at the organization of the Associated Fraternities of - 
America in January, 1901, to July, 1901, he and his Committee were very active as will 
appear from his report given below : 

Your Committee on Jurisprudence and Legislation beg leave to submit the follow- 
ing report to your first annual convention : 

It hardly seems necessary for us to preface this report with the general statement, 
the truth of which must be recognized beforehand by all who have given any thought 
to the subject, that the work of this Committee, in the short time alloted for its 
accomplishment, has involved a large amount of correspondence and no little diplomacy 
and tact, owing to the fact that the field of inquiry and investigation has been so 
thoroughly traversed by the like committee of the National Fraternal Congress, and 
some insurance departments have misunderstood the object of this new association 
of fraternal societies. However, we take pleasure in remarking that in every case, 
when the object and aims of the Associated Fraternities have been courteously 
explained to the insurance commissioners of our several States, your committee has 
received prompt and kindly replies to its inquiries, and in many instances have been 
assured of the hearty cooperation of the insurance departments in the general efforts 
of the Associated Fraternities to reach a common basis of harmony and government 
satisfactory to the Fraternities on the one hand and to the insurance officials on the 
other. At the outset, therefore, we thank such insurance officials for their courtesy 
and consideration. 

The following States have on their statute books what is known as the National 
Fraternal Congress Old Uniform Bill, before its minimum rate amendment, with here 
and there slight modifications, more or less local in their character, but not seriously 
affecting the real import of the bill, viz. : Michigan, Illinois, Wisconsin, Iowa, Ne- 
braska, Missouri, Kansas, Ohio, Pennsylvania, New York, New Jersey, Connecticut, 
New Hampshire, District of Columbia, Maryland, Georgia, Alabama and South 
Carolina. 

The Kansas law provides that no beneficiary certificates shall be issued by a new 
association, incorporated thereunder, until its benefit fund contains in cash paid in an 
amount equal to at least twice the death benefit promised in its smallest certificate; 
and no association can be admitted to do business in this State unless it is shown 
that one assessment upon its membership at the specified rates will produce sufficient 
funds to pay a claim in full under its largest certificate. The Kansas law also makes 
it unlawful for any association to use any portion of its mortuary or emergency fund 
for expenses. 

The South Carolina, Alabama and District of Columbia laws make provision for 
withdrawal benefit after a period of from three to ten years, such withdrawal benefit 
not to exceed, however, the amount contributed by the withdrawing member. 

The South Carolina law is similar to that of Ohio and some other States in the 
provision that no order can be authorized to do business within this State, until it has 
on deposit to the credit of the association for the payment of death and other claims, 
and which amount cannot be used for expenses, the sum of five thousand dollars 
($5,000), which if advanced by the trustees or other officers, may be repaid to them 
from the proceeds of an expense fund for this purpose. 

The Maryland law contains a provision that no society can be authorized to do 
business in that State, if it (promises to pay any withdrawal, surrender, endowment, 
old age or other benefit besides sickness, accident or death, unless it shall have first 
deposited with the Insurance Commissioner the sum of ten thousand dollars in divi- 



64 

dend-bearing securities satisfactory to said Commissioner as a guarantee that such 
certificates will be paid by it. However, if such society furnishes satisfactory evidence 
that it has in its home State such deposit it need not make the deposit in Maryland. 

So far as the Committee has been able to ascertain, the following States have 
practically no law governing fraternal beneficiary societies, viz. : Rhode Island (pro- 
vided they employ no paid agents), West Virginia, Oregon, California, Montana, 
Mississippi, and Florida. 

The following States have laws exempting fraternal beneficiary societies from the 
operation of the insurance laws, but require annual reports, to-wit : Virginia, Delaware, 
and Kentucky. There are indications, however, that the day of reckoning is approach- 
ing in some of these States, as the, Insurance Commissioner of one of them writes : 
"I regret to say this department has no jurisdiction over fraternal organizations." 

Colorado has a law calling for the filing of articles of incorporation or association 
of fraternal societies and providing for the appointment of an attorney for the service 
of process. This law does not provide for the filing of annual reports, though it is 
believed that the general insurance laws of the State provide for this. 

The Minnesota law places our societies in the same category with cooperative life, 
endowment and casualty companies, a classification which every true fraternalist will 
repudiate. 

The Wisconsin law is especially burdensome in a financial way, as it provides for 
the collection of a total of ninety-three dollars for entrance to do business and annual 
renewal in that State — forty dollars of which goes to newspapers — truly a good example 
of the power of the press. 

The State of South Dakota makes its general assessment insurance law applicable 
to fraternal beneficiary societies — another classification which many of the up-to-date 
fraternalists roundly repudiate. 

And now we come to the legislation recently enacted or attempted. The National 
Fraternal Congress Bill, as amended in Boston, prescribing minimum rates, was 
adopted last winter in Maine, Vermont, Massachusetts, Indiana, North Dakota, Okla- 
homa and Washington. It failed in Pennsylvania, Wisconsin, Missouri, Nebraska, 
Wyoming, Texas, Minnesota and Oregon. 

Your Committee has already said that the Associated Fraternities of America came 
into existence as an organization none too soon. On March 21, the very day of the 
organization of this association, the new National Fraternal Congress Bill went into 
effect in Maine. If the National Fraternal Congress is responsible for all the pro- 
visions of the Maine enactment, then it is high time that the fraternals of America 
should awake to the danger that confronts them through the influence of the Fraternal 
Congress. The first section of the Maine law timidly announces that "Any such 
fraternal beneficiary association may create, maintain, disburse and apply a reserve 
or emergency fund in accordance with its by-laws or constitution." Notwithstanding 
this declaration in favor of self-government, section 7 of this law provides as follows : 
"Each such association hereafter organized under the provisions of this act, shall, on 
or before the 31st day of December in each year, deposit with the State Treasurer 
to the credit of its emergency or reserve fund not less than fifteen per cent of its 
total mortuary receipts for the year then ending, until the amount so deposited 
amounts to not less than fifty thousand dollars ($50,000)." 

This section also provides that "The Insurance Commissioner shall annually in 
February certify to the Treasurer of State the minimum amount of reserve fund 
required to be kept on deposit in the treasury by each association doing business under 
this act." This section also provides the manner in which the State shall proceed to 
administer these funds in its hands, for the satisfying of judgments against the 
association or in closing up the affairs of the society. 

The law enacted in the State of Washington, on. March 18, 1901, is the Boston 
Fraternal Congress Bill in its "Simon-pure" form, except that the expenses of exami- 
nation is made two hundred dollars in associations having no reserve fund and four 
hundred dollars in the case of those that have a reserve fund. 

The Wyoming legislature at its last session enacted a law similar to the first 
National Fraternal Congress Bill. In forwarding the Committee a copy of this law, 
the Auditor of State significantly writes : "This law is not like the one that was intro- 
duced. The uniform law recommended by the National Fraternal Congress was 
introduced in its entirety, and after it had been through the various committees, it 



65 

was amended and finally, the one enclosed is the result/' Your Committee would be 
pleased to thank those whose influence thus saved the day in Wyoming. 

The minimum rate measure was defeated in the Texas legislature "on account of 
opposition from the Societies themselves," as reported to your Committee by the 
Commissioner of that State. The Texas legislature passed a law providing for can- 
cellation of certificate of authority upon the failure of a fraternity to pay any 
judgment. 

The last session of the legislature in Arkansas adopted a law which provides that 
all fraternal beneficiary orders operating in that State shall give a bond of ten thousand 
dollars to the State, conditioned upon the prompt payment of claims in that State. 

In concluding this survey of statutes in force or attempted for the regulation of 
fraternal beneficiary societies in the several States of the Union, your Committee 
desires to make these observations, to-wit : 

i. After fifteen years of legislation proposed and urged by the National Fraternal 
Congress, there is a great deal of non-uniformity in the so-called uniform bill now 
on the statute books. 

2. Owing to the national scope and character of fraternal beneficiary societies, 
there is the most urgent need of statutory legislation that shall be uniform, not in 
name only, but in fact in every State in the Union. 

3. It is to be profoundly regretted that the National Fraternal Congress should 
have proposed discriminatory legislation that divides the fraternal forces of America 
just at the time when they should present an unbroken front before the entrenched 

! hosts of our common enemy. 

4. Every true fraternalist will welcome any just plan of harmonizing the forces 
in the fraternal field, so as to secure statutory legislation that shall be uniform 
throughout our common country in its application to all fraternal beneficiary societies 
with equal force and effect. 

I 

For ten years there was bitter contention between The National Fraternal Congress 
and the Associated Fraternities of America in respect of legislation in the different 
States. Where the National Fraternal Congress would undertake to have the uniform 
bill adopted, the Representatives of the Associated Fraternities of America would appear 
in opposition ; where the Associated Fraternities would undertake to have legislation 
with regard to reserve funds and the permission of surrender values, then the Repre- 
sentatives of the National Fraternal Congress would appear in opposition. 

The division between the Fraternal forces was extremely unfortunate, and I shall 
not go into detail of the history of legislation during the ten years 1901-1910. I come 
directly to the joint action of the two National bodies at Mobile in connection with 
the Convention of Insurance Commissioners in 1910, when a Uniform Bill was agreed 
upon between these three National Associations ; that is, the National Fraternal Con- 
gress, the Associated Fraternities and the Convention of Insurance Commissioners. 
The results of this Conference and agreement was a bill to be recommended for 
enactment in the several States, and was known as the "Mobile Bill." At the Confer- 
ence in Mobile with the Insurance Commissioners the representatives of the National 
Fraternal Congress were Chas. E. Piper and Abb Landis. The representatives of the 
Associated Fraternities were Arthur Burnett, Benjamin D. Smith, Lee W. Squier, 
Robert S. lies, George Dyre Eldridge. In 191 1 many of the States enacted into law 
the Uniform Bill agreed upon at Mobile. However, it was found that many societies 
still objected to some of the provisions of the Mobile Bill, and a general conference 
of representatives of the National Fraternal Congress, the Associated Fraternities of 
America and the Federated Fraternities were held in New York late in 1912, and a 
section added to the bill providing for a third form of valuation, and known as section 
23b of the "New York Conference Bill." There was a large gathering of Fraternal rep- 
resentatives in New York, the National Fraternal Congress and the Associated Frater- 



66 

nities being represented by the same gentlemen who represented those bodies in Mobile 
in 1910. The New York Conference Bill has been enacted into law in a number of States. 
The main features of the Mobile Bill and the New York Conference Bill, which dis- 
tinguish those measures from any other heretofore recommended by the Congress or 
other Fraternal bodies, were the provisions for valuation. The following are the main 
provisions of the New York Conference Bill : 

THE NEW YORK CONFERENCE BILL. 

Section 1. (Fraternal Benefit Societies Defined.) Any corporation, society, order 
or voluntary association, without capital stock, organized and carried on solely for 
the mutual benefit of its members and their beneficiaries, and not for profit, and 
having a lodge system with ritualistic form of work and representative form of gov- 
ernment, and which shall make provision for the payment of benefits in accordance 
with Section 5 hereof, is hereby declared to be a Fraternal Benefit Society. 

Section 2. (Lodge System Defined.) Any society having a supreme governing 
or legislative body and subordinate lodges or branches by whatever name known, 
into which members shall be elected, initiated and admitted in accordance with its con- 
stitution, laws, rules, regulations and prescribe ritualistic ceremonies, which subor- 
dinate lodges or branches shall be required by the laws of such society to hold regular 
or stated meetings at least once in each month, shall be deemed to be operating on 
the lodge system. 

Section 3. (Representative Form of Government Defined.) Any such society shall 
be deemed to have a representative form of government when it shall provide in its 
constitution and laws for a supreme legislative or governing body, composed of repre- 
sentatives elected either by the members or by delegates elected directly or indirectly 
by the members, together with such other members as may be prescribed by its con- 
stitution and laws ; provided, that the elective members shall constitute a majority in 
number and have not less than two-thirds of the votes, nor less than the votes 
required to amend its constitution and laws ; and provided further, that the meetings 
of the supreme or governing body, and the election of officers, representatives or 
delegates shall be held as often as once in four years. The members, officers, repre- 
sentatives or delegates of a fraternal benefit society shall not vote by proxy. 

Section 4. (Exemptions.) Except as herein provided, such societies shall be gov- 
rened by this Act, and shall be exempt from all provisions of the insurance laws of 
this State, not only in governmental relations with the State, but for every other 
purpose, and no law hereinafter enacted shall apply to them, unless they be expressly 
designated therein. 

Section 5. (Benefits.) Subsection 1. Every Society transacting business under 
this act shall provide for the payment of death benefits, and may provide for the pay- 
ment of benefits in case of temporary or permanent physical disability, either as the 
result of disease, accident or old age ; provided, the period of life at which the pay- 
ment of benefits for disability on account of old age shall commence, shall not be 
under seventy years, and may provide for monuments or tombstones to the memory 
of its deceased members, and for the payment of funeral benefits. Such Society 
shall have the power to give a member, when permanently disabled or on attaining the 
age of seventy, all, or such portion of the face value of his certificate as the laws 
of the Society may provide ; provided, that nothing in this act contained shall be so 
construed as to prevent the issuing of benefit certificates for a term of years less than 
the whole of life which are payable upon the death or disability of the member oc- 
curring within the term for which the benefit certificate may be issued. Such Society 
shall, upon written application of the member, have the power to accept a part of the 
periodical contributions in cash, and charge the remainder, not exceeding one-half 
of the periodical contribution, against the certificate with interest payable or com- 
pounded annually at a rate not lower than four per cent per annum ; provided, that 
this privilege shall not be granted except to Societies which have readjusted or may 
hereafter readjust their rates of contributions, and to contracts affected by such 
readjustment. 

Subsection 2. Any Society which shall show by the annual valuation hereinafter 
provided for that it is accumulating and maintaining the reserve not lower than the 



67 

usual reserve computed by the American Experience Table and four per cent in- 
terest, may grant to its members extended and paidup protection, or such withdrawal 
equities as its constitution and laws may provide; provided, that such grants shall 
in no case exceed in value the portion of the reserve to the credit of such members 
to whom they are made. 

Section 6 provides for the payment of death benefits for wife, husband, relative 
by blood to the fourth degree, father-in-law, mother-in-law, son-in-law, daughter-in- 
law, stepfather, stepmother, stepchildren, children by legal adoption, or to a person 
or persons dependent upon the member; provided, that if after the issuance of the 
original certificate the member shall become dependent upon an incorporated charitable 
institution, he shall have the privilege, with the consent of the society, to make such 
institution his beneficiary. 

Section 7 provides that any society may admit to beneficial membership any person 
not less than sixteen and not more than sixty years of age, who has been examined 
by a legally qualified physician. 

Section 8 provides that every certificate issued by any society shall specify the 
amount of benefit provided thereby, and shall provide that the certificate, the charter 
or articles of incorporation, or, if a voluntary association, the articles of association, 
the constitution and laws of the society and the application for membership and medical 
examination, signed by the applicant, -and all amendments to each thereof, shall con- 
stitute the agreement between the society and the member. 

Section 9. (Funds.) Subsection i. Any society may create, maintain, invest, 
disburse and apply an emergency, surplus or other similar fund in accordance with 
its laws. Unless otherwise provided in the contract such funds shall be held, invested 
and disbursed for the use and benefit of the society, and no member or beneficiary 
shall have or acquire individual rights therein or become entitled to any apportionment 
or the surrender of any part thereof, except as provided in Subsection 2 of Section 
5 of this Act. The funds from which benefits shall be paid and the funds from which 
the expenses of the society shall be defrayed shall be derived from periodical or other 
payments by the members of the society and accretions of said funds ; provided, that 
no society, domestic or foreign, shall hereafter be incorporated or admitted to transact 
business in this State which does not provide for stated periodical contributions suffi- 
cient to provide for meeting the mortuary obligations contracted, when valued upon 
the basis of the National Fraternal Congress Table of Mortality as adopted by the 
National Fraternal Congress August 23, 1899, or any higher standard, with interest 
assumption not more than four per cent per annum, or write or accept members for 
temporary or permanent disability benefits except upon tables based upon reliable 
experience, with an interest assumption not higher than 4 per cent per annum. 

Subsection 2. Deferred payments or installments of claims shall be considered 
as fixed liabilities on the happening of the contingency upon which such payments or 
installments are thereafter to be paid. Such liability shall be the present value of 
such future payments or installments upon the rate of interest and mortality assumed 
by the society for valuation, and every society shall maintain a fund sufficient to 
meet such liability regardless of proposed future collections to meet any such lia- 
bilities. 

Section 10 provides for the investment of funds. 

Section 11 provides that the payments by members, in whatever form made, shall 
distinctly state the purpose of the same and the proportion thereof which may be 
used for expenses, and that no part of the money collected for mortuary or dis- 
ability purposes or the net accretions of (on) either or any of said funds shall be used 
for expenses. 

Section 12 provides for the organization of societies with not less than seven 
persons, a majority of whom are citizens of the State, and that the application for 
the charter must give the proposed name of the society, the purpose for which it is 
formed and the names, residences, official titles of all the officers, trustees, directors 
or other persons who are to have and exercise the general control and management 
of the affairs and that such articles of incorporation and a bond in the sum of five 
thousand dollars, with sureties approved by the Superintendent of Insurance, shall 
be filed with the Superintendent of Insurance. But that its certificate shall not be 



68 

issued until there have been secured at least 500 lives for at least $1,000 each, and 
also applicants for death benefits have been regularly examined by legally qualified 
practicing physicians, nor until there shall be established ten subordinate lodges or 
branches into which said five hundred applicants have been initiated, nor until there 
has been submitted to the Superintendent of Insurance, under oath of the President 
and Secretary, a list of such applicants, giving their names, addresses, date examined, 
date approved, date initiated, name and number of the subordinate branch of which 
each applicant is a member, the amount of benefits to be granted, the rate of stated 
periodical contributions, which latter shall be sufficient to provide for meeting the 
mortuary obligation contracted, when valued for death benefits upon the basis of the 
National Fraternal Congress Table of Mortality, as adopted by the National Fra- 
ternal Congress August 23, 1899, or any higher standard at the option of the society, 
and for disability benefits by tables based upon reliable experience and for combined 
death and permanent total disability benefits by tables based upon reliable experience, 
with an interest assumption not higher than 4 per cent per annum. Then follows 
the usual preliminaries provided in the Uniform Bill before the society can commence 
business. 

Section 13 provides that any society now engaged in transacting business in this 
State may exercise, after the passage of this Act, 'all of the rights conferred thereby, 
and all of the rights, powers, and privileges now exercised or possessed by it under 
its charter or articles of incorporation not inconsistent with this Act, if it be incor- 
porated ; or, if .It be a voluntary association, it may incorporate hereunder. 

Section 14 relates to mergers and transfers. 

Section 15 provides for an annual license. 

Section 16 provides for admission of a foreign society. 

Section 17 provides for power of attorney and service of process. 

Section 18 provides for the place of meeting and location of office. 

Section 19 provides that there shall be no personal liability incurred by officers 
and members of the supreme, grand or any other subordinate body of any such 
society. 

Section 20 provides that no subordinate body nor any of its subordinate officers 
or members shall have the power or authority to waive any of the provisions of 
the laws and constitution of the society. 

Section 21 provides that no money or other benefits shall be liable to attachment, 
garnishment or other process, or be seized, taken, appropriated or applied by any legal 
or eauitable process or operation of law to pay anv debt or liability of a member or 
beneficiary, or any other person who may have a right thereunder, either before or 
after payment. 

Section 22 provides for the amendment of the constitution and laws. 

Section 23. (Annual Reports.) Everv society transacting business in this State 
shall annually, on or before the first day of March, file with the Superintendent of In- 
surance, in such form as he may require, a statement under oath of its President and 
Secretarv or corresponding officers, of its condition and standing on the thirty-first 
clay of December next preceding:, and of its transactions for the vear ending on that 
date, and also shall furnish such other information as the Superintendent may deem 
necessary to a proper exhibit of its business and plan of working. The Superintendent 
may at other times require any further statement he may deem necessary to be made 
relating to such society. 

Tn addition to the annual report herein required, each society shall annually 
report to the Superintendent a valuation of its certificates in force on December 31st, 
last preceding; excluding- those issued within the year for which the report is filed, 
in cases where the contributions for the first year in whole or in part are used for 
current mortality and expenses; provided, the first report of valuation shall be made 
as of December 31, 1912. Such report of valuation shall show, as contingent liabilities, 
the present mid-year value of the nromised benefits provided in the constitution 
and laws of such society under certificates then subject to valuation; and, as con- 
tingent assets, the present mid-year value of the future net contributions provided in 
the constitution and laws as the same are in practice actually collected. At the option 
of any society, in lieu of the above, the valuation mav show the net value, and when 
computed in case of monthly contributions mav be the mean of the terminal values 
for the end of the preceding and of the current insurance years. 






69 

Such valuation shall be certified by a competent accountant or actuary, or, at the 
request and expense of the society, verified by the actuary of the Department of In- 
surance of the home State of the society, and shall be filed with the Superintendent 
within ninety days after the submission of the last preceding annual report. The 
legal minimum standard of valuation for all certificates, except for disability benefits, 
shall be the National Fraternal Congress Table of Mortality as adopted by the Na- 
tional Fraternl Congress August 23, 1899, or, at the option of the society, any 
higher table ; or, at its option, it may use a table based upon the society's own ex- 
perience of at least twenty years and covering not less than one hundred thousand 
lives, with interest assumption not more than 4 per centum per annum. Each such 
valuation report shall set forth clearly and fully the mortality and interest basis and 
the method of valuation. Any society providing for disability benefits shall keep 
the net contributions for such benefits in a fund separate and apart from all other 
benefit and expense funds and the valuation of all other business of the society; 
provided, that where a combined contribution table is used by a society for both 
death and permanent total disability benefits the valuation shall be according to tables 
of reliable experience and in such case a separation of the funds shall not be required. 

The valuation herein provided for shall not be considered or regarded as a test 
of the financial solvency of the society, but each society shall be held legally solvent 
so long as the funds in its possession are equal to or in excess of its matured 
liabilities. 

Beginning w r ith the year 1914, a report of such valuation and an explanation of 
the facts concerning the condition of the society thereby disclosed shall be printed 
and mailed to each beneficiary member of the society not later than June 1st of each 
year; or, in lieu thereof, such report of valuation and showing of the society's con- 
dition as thereby disclosed may be published in the society's official paper and the 
issue containing the same mailed to each beneficiary member of the society. The 
laws of such society shall provide that if the stated periodical contributions of the 
members are insufficient to pay all matured death and disability claims in full, and 
to provide for the creation and maintenance of the funds required by its laws, 
additional, increased or extra rates of contributions shall be collected from the mem- 
bers to meet such deficiency; and such laws may provide that, upon the written 
application or consent of the member, his certificate may be charged with its propor- 
tion of any deficiency disclosed by valuation, with interest not exceeding 5 per centum 
per annum. 

Section 23a. (Provisions to Insure Future Security.) If the valuation of the 
certificates, as hereinbefore provided, on December 31, 1917, shall show that the 
present value of future net contributions, together with the admitted assets, is less 
than the present value of the promised benefits and accrued liabilities, such society 
shall thereafter maintain said financial condition at each succeeding triennial valua- 
tion in respect of the degree of deficiency as shown in the valuation as of December 
31, 1917. If at any succeeding triennial valuation such society does not show at 
least the same condition the Supterintendent shall direct that it thereafter comply 
with the requirements herein specified. If the next succeeding triennial valuation 
after the receipt of such notice shall show that the society has failed to maintain 
the condition required herein the Superintendent may, in the absence of good cause 
shown for such failure, institute proceedings for the dissolution of such society, 
in accordance with the provision of Section 24 of this Act, or, in the case of a foreign 
society, its license may be cancelled in the manner provided in this Act. 

Any such society, shown by any triennial valuation, subsequent to December 31, 
1917, not to have maintained the condition herein required, shall, within two years 
thereafter, make such improvement as to show a percentage of deficiency not greater 
than as of December 31, 1917, or thereafter, as to all new members admitted, be sub- 
ject, so far as stated rates of contributions are concerned, to the provisions of Sec- 
tion 12 of this Act, applicable in the organization of new societies: provided, that the. 
net mortuary or beneficiary contributions and funds of such new members shall be 
kept separate and apart from the other funds of the society. If such required im- 
provement is not shown by the succeeding triennial valuation, then the said new 
members may be placed in a separate class and their certificates valued as an in- 
dependent society in respect of contributions and funds. 

Section 23b. In lieu of the requirements of Sections 23 and 23a, any society, 
accepting in its laws the provisions of this section, may value its certificates on a 



70 

basis, herein designated "accumulation basis," by crediting each member with the 
net amount contributed for each year and with interest at approximately the net 
rate earned and by charging him with his share of the losses for each year, herein 
designated "cost of insurance," and carrying the balance, if any, to his credit. The 
charge for the cost of insurance may be according to the actual experience of the 
society applied to a table of mortality recognized by the law of this State, and shall 
take into consideration the amount at risk during each year, which shall be the 
amount payable at death less the credit to the member. Except as specifically pro- 
vided in its articles or laws or contracts no charge shall be carried forward from 
the first valuation hereunder against any member for any past share of losses ex- 
ceeding the contributions and credit. If, after the first valuation, any member's 
share of losses for any year exceeds his credit including the contribution for the 
year, the contribution shall be increased to cover his share of the losses. Any such 
excess share of losses chargeable to any member may be paid out of a fund or 
contributions especially created or required for such purpose. 

Any member may transfer to any plan adopted by the society with net rates on 
which tabular reserves are maintained and on such transfer shall be entitled to make 
such application of his credit as provided in the laws of the society. 

Certificates issued, rerated or readjusted on a basis providing for adequate rates 
with adequate reserves to mature such certificates upon assumptions for mortality 
and interest recognized by the law of this State shall be valued on such basis, herein 
designated the "Tabular Basis" ; provided, that if on the first valuation under this 
section a deficiency in reserve shall be shown for any such certificate the same shall 
be valued on the accumulation basis. 

Whenever in any society having members upon the tabular basis and upon the 
accumulation basis the total of all costs of insurance provided for any year shall 
be insufficient to meet the actual death and disability losses for the year, the deficiency 
shall be met for the year from the available funds after setting aside all credits 
in the reserve ; or from increased contributions or by an increase in the number of 
assessments applied to the society as a whole or to classes of members as may be 
specified in its laws. Savings from a lower amount of death losses may be returned 
in like manner as may be specified in its laws. 

If the laws of the society so provide, the assets representing the reserves of any 
separate class of members may be carried separately for such class as if in an 
independent society, and the required reserve accumulation of such class so set 
apart shall not thereafter be mingled with the assets of other classes of the society. 

A table showing the credits to individual members for each age and year of 
entry and showing opposite each credit the tabular reserve required on the whole 
life or other plan of insurance specified in the contract, according to assumptions 
for mortality and interest recognized by the law of this State and adopted by the 
society, shall be filed by the society with each annual report and also be furnished to 
each member before July ist of each year. 

In lieu of the aforesaid statement there may be furnished to each member within 
the same time a statement giving the credit for such member and giving the tabular 
reserve and level rate required for a transfer carrying out the plan of insurance 
specified in the contract. No table or statement need be made or furnished where 
the reserves arc maintained on the tabular basis. 

For this purpose individual bookkeeping accounts for each member shall not be 
required and all calculations may be made by actuarial methods. 

Nothing herein contained shall prevent the maintenance of such surplus over 
and above the credits on the accumulation basis and the reserves on the tabular 
basis as the societv may provide by or nursuant to its laws; nor be construed as 
giving to the individual member any right or claim to any such reserve or credit 
other than in maimer as exoressed in the contract and its laws; nor as making any 
such reserve or credits a liability in determining the legal solvency of the society. 

Section 24. (Examination of Domestic Societies.) The Superintendent of In- 
surance, or any person he may appoint, shall have the power of visitation and 
examination into the affairs of any domestic society. He may employ assistants for 
the purpose of such examination, and he. or any person he may appoint, shall have 
free access to all the books, papers and documents that relate to the business of 



71 

the society and may summon and qualify as witness under oath and examine its 
officers, agents and employees or other persons in relation to the affairs, transactions 
and conditions of the society. 

The expense of such examination shall be paid by the society examined, upon 
statement furnished by the Superintendent of Insurance, and the examination shall 
be made at least once in three years. 

Whenever, after examination, the Superintendent of Insurance is satisfied that 
any domestic society has failed to comply with any provisions of this Act, or is ex- 
ceeding its powers, or is not carrying out its contract in good faith, or is transacting 
business fraudulently; or whenever any domestic society, after the existence of one 
year* or more, shall have a membership of less than 400 (or shall determine to dis- 
continue business), the Superintendent of Insurance may present the facts relating 
thereto to the Attorney-General, who shall, if he deem the circumstances warrant, 
commence an action in quo warranto in a court of competent jurisdiction, and such 
court shall thereupon notify the officers of such society of a hearing, and if it shall 
then appear that such society should be closed, said society shall be enjoined from 
carrying on any further business and some person shall be appointed receiver of such 
society, and shall proceed at once to take possession of the books, papers, moneys and 
other assets of the society and to distribute its funds to those entitled thereto 1 . 

No such proceedings shall be commenced by the Attorney-General against any 
such society until after notice has been duly served on the chief executive officers of 
the society and a reasonable opportunity given to it, on a date to be named in said 
notice, to show cause why such proceedings should not be commenced. 

Section 25. (Application for Receiver, etc.) No application for injunction against 
or proceedings for the dissolution of, or the appointment of a receiver for any such 
domestic society, or branch thereof, shall be entertained by any court in this State 
unless the same is made by the Attorney-General.* 

Section 26. (Examination of Foreign Societies.) The Superintendent of Insur- 
ance, or any person whom he may appoint, may examine any foreign society trans- 
acting or applying for admission to transact business in this State. The said Super- 
intendent may employ assistants and he, or any person he may appoint, shall have 
free access to all the books, papers and documents that relate to the business of the 
society, and may summon and qualify as witness under oath and examine its officers, 
agents and employes and other persons in relation to the affairs, transactions and con- 
ditions of the society. He may, in his discretion, accept in lieu of such examination 
the examination of the Insurance Department of the State, territory, district, province 
or country where such society is organized. The actual expenses of examiners making 
any such examination shall be paid by the society upon statement furnished by the 
Superintendent of Insurance. 

If any such society or its officers refuse to submit to such examination or to com- 
ply with the provisions of the section relative thereto, the authority of such society 
to wnte n**w business in this State shall be suspended or license refused until satis- 
factory evidence is furnished the Sunerintendent relating- *o ^he condition and affairs 
of the society, and during such suspension the society shall not write new business 
in this State. 

Section 27. (No adverse Publications.) Pending, during or after an examination 
or investigation of any such society, either domestic or foreign, the Superintendent of 
Insurance shall make public no financial statement, report or finding, nor shall he 
permit to become public any financial statement, report or finding affecting the status, 
standing or rights of any such society, until a copy thereof shall have been served 
upon such society at its home office, nor until such society shall have been afforded 
a reasonable opportunity to answer any such financial statement, report or finding, 
and to make such showing in connection therewith as it may desire. 

Section 28. (Revocation of License.) When the Supterintendent of Insurance 
on investigation is satisfied that any foreign society transacting business under this 
Act has exceeded its powers, or has failed to comply with any provisions of this 
Act, or is conducting business fraudulently, or is not carrying out its contract in 
good faith, he shall notify the society of his findings, and state in writing the grounds 
of his dissatisfaction, and after reasonable notice require said society, on a date named, 
to show cause why its license should not be revoked. If on the date named in said 



72 

notice such objections have not been removed to the satisfaction of the said Superin- 
tendent, or the society does not present good and sufficient reasons why its authority 
to transact business in this State should not at that time be revoked, he may revoke 
the authority of the society to continue business in this State. All decisions and 
findings of the Superintendent made under the provisions of this section may be 
reviewed by proper proceedings in any court of competent jurisdiction, as provided 
in Section 16 of this Act. 

Section 29 provides for the exemption of certain societies, such as the Masons, 
Odd Fellows or Knights of Pythias (exclusive of the Insurance Department) and 
the Junior Order of United American Mechanics (exclusive of the Beneficiary Degree 
or Insurance Branch), and societies which limit their membership to any one hazardous 
occupation, or to similar societies which do not issue insurance certificate, nor to an 
association of local lodges of a society now doing business in this State which pro- 
vides death benefits not exceeding five hundred dollars to any one person, or dis- 
ability benefits not exceeding three hundred dollars in any one year to any one per- 
son, or both, nor to any contracts of re-insurance business on such plan in this State, 
nor to domestic societies which limit their membership to the employes of a particular 
city or town, designated firm, business house or corporation, nor to orders or asso- 
ciations of a purely religious, charitable and benevolent description which do not pro- 
vide for a death benefit of more than one hundred dollars or for disability benefits of 
more than one hundred and fifty dollars to any one person in any one year. 

Section 29 also provides that any fraternal benefit society heretofore organized and 
incorporated and operating within the definition set forth in Sections 1, 2 and 3 
of this Act and providing for benefits in case of death or disability resulting solely from 
accidents, but which does not obligate itself to pay death or sick benefits, may be licensed 
under the provisions of this Act, and shall have all the privileges and shall be subject 
to all the provisions and regulations of this Act, except that the provisions of this Act 
requiring medical examinations, valuations of benefit certificates, and that the certificate 
shall specify the amount of benefits, shall not apply to such society. 

Section 30 provides that every fraternal benefit society organized or licensed under 
this Act is hereby declared to be a charitable and benevolent institution, and all of its 
funds shall be exempt from all and every State, county, district, municipal and school 
tax, other than taxes on real estate and office equipment. 

Section 31 provides for penalties for the violations of any of the provisions of 
the Act. 

Section 32 repeals all Acts or parts of Acts inconsistent with this Act. 

To July 1, 1913, the "New York Conference Bill" had been enacted into law by 
Arizona, Connecticut, Idaho, Michigan, New Hampshire, New York, North Carolina, 
North Dakota, Rhode Island, Tennessee, Texas, Wisconsin, and Wyoming — 13. 

To the same date the "Mobile Bill" (which does not include Section 23b, but 
requires annual valuation and triennial improvement of 5 per cent if degree of sol- 
vency is below 90 per cent) had been enacted into law by Alabama, California, 
Colorado, Louisiana, Maryland, Missouri, Montana, Ohio, Oregon, Utah, and Wash- 
ington — 11. 

Massachusetts had enacted a law virtually the same as the "Mobile Bill," ex- 
cepting 23a — 1. 

The "N. F. C. Uniform Hill" had been enacted into law by Indiana, Iowa, Maine, 
Minnesota, Oklahoma, and Vermont — 6. 

The "Mobile Bill" was in force by department rulings in Mississippi and South 
Carolina — 2. 

There is no provision for valuation in the "N. F. C. Uniform Bill," but there is 
a provision which enables the Commissioner to call for "such further information as 
he deems necessary to a proper exhibit of its business and plan of working," and in 
the exercise of this authorized discretion it is understood that the Commissioners 



78 

of the six States where that bill is the law will demand a valuation report. There- 
fore, beginning with 1914, the fraternal societies doing business in the thirty-three 
above named States, must report valuation results as of December 31, 1913, and 
annually thereafter, and the results must be made known to the membership. 

On good authority, it is stated that all commissioners belonging to the National 
Convention of Insurance Commissioners (which will probably include the commis- 
sioners of all of the States) will use the Uniform Fraternal Blank for annual re- 
ports, which will require valuation returns. Hence it appears that there will be 
a general demand in 1914 for the valuation of all fraternal beneficiary societies now 
doing business in the United States, since all commissioners have the discretionary 
power to call for "further information." 

The States not above enumerated have general laws or exemption laws in respect 
of fraternal societies, and it is anticipated that all, or at least the most, of the States 
will soon have on their statute books a uniform bill known as the New York Con- 
ference Bill. 

There have been no material changes in the laws of the Dominion or the Provinces 
of Canada, but the Government at Otawa is now considering the advisability of 
recommending to the Parliament the passage of a law similar to that of the New 
York Conference Bill, or at least which will provide for valuations of certificates. 
There was special legislation in the Province of Ontario for the benefit of the Inde- 
pendent Order of Foresters, and which is virtually the charter of that organization. 
Under that charter the readjustment of the old class of members who entered the 
society prior to 1898 was made and has created considerable friction between the 
Independent Order of Foresters and some Insurance Departments, especially that 
of Wisconsin. It appears that what is permissible under the Act of Ontario is not 
allowed in the State of Wisconsin. At least that is the representation made by the 
Insurance Commissioner of that State. At this writing there is an unfortunate con- 
tention between the Insurance Commissioner of Wisconsin and the Independent 
Order of Foresters, and it now appears that several other commissioners will join 
with the Commissioner of Wisconsin in certain demands upon the Society, which 
are resisted by the officials of that organization. Otherwise than this difference it 
would appear that all of the fraternal beneficiary societies and the insurance com- 
missioners are agreed upon the provisions of the uniform bill as hereinbefore set forth. 

Not only has there been an agreement upon the provisions for State legislation, 
but there was a consummation of fraternal amity by the consolidation of the National 
Fraternal Congress and the Associated Fraternities into one organization to be known 
as the National Fraternal Congress of America. This most desirable and commend- 
able act resulted from a meeting of both associations during the same week in the 
city of Chicago, in August, 1913. There still remains the independent organization 
known as the Federated Fraternities. Though requests have been made, I have not 
been furnished with the proceedings of that organization, and unfortunately my 
engagements have been such that I have been unable to attend the meetings either 
in 1913 or in previous years. For sixteen years I have attended the annual sessions 
of the National Fraternal Congress and with one exception have also attended the 
annual meetings of the Associated Fraternities of America. I have had closer rela- 
tions with the National Fraternal Congress and have been honored with representa- 
tion on its Committee on Statutory Legislation, as well as being appointed as a 
special representative in the many conferences held with the Insurance Commissioners 
in conjunction with the representatives of the Associated Fraternities. I have been 
cordially received into the meetings of both of these National Associations during 



74 

the ten years when they were not agreed upon public policy. I have read many papers 
before both organizations and have tried to do my part, not only in securing proper 
legislation for the fraternal systems, but in establishing rates of contribution that 
would provide for the benefits promised. 

I have quoted liberally from the proceedings of the National Fraternal Congress 
up to 1901, but have passed over the ten years when there was contention between 
the fraternal forces. While there was little real progress towards desirable legisla- 
tion during that period, nevertheless there were many things accomplished by co- 
operation between the two national bodies and the Convention of Insurance Com- 
missioners and probably the time was not lo;st considering the accomplishment in 1910 
in the way of the Mobile Bill and in 1912 in the agreement upon the New York 
Conference Bill, which latter was not only agreed to by the National Fraternal Con- 
gress and the Associated Fraternities of America and the National Convention of 
Insurance Commissioners, but as well by the Federated Fraternities. 

However, the part played by the Associated Fraternities was that of the leading 
character during the eventful decade, 1901-1911, and this history would not be com- 
plete without some reference to its policies and personnel. 

The President of the first annual meeting, Mr. C. H. Robinson, was a man of 
culture who had made an enviable reputation as a lawyer and lawmaker in Iowa 
before identifying himself with the Brotherhood of American Yeomen. 

The first Secretary, Mr. Edmund Jackson, had been connected with active fra- 
ternal work until he was generally and favorably known as a man worthy to become 
a leader in the new movement. He was then Secretary of the Mystic Workers of 
the World. 

There were few Societies amongst those represented at the first annual meeting 
that had been in business for ten years, but there were many intelligent and earnest 
men amongst the representatives. The following names will be recognized as those 
of faithful and successful officials of well-known Fraternal Beneficiary Societies : 
G. H. Slocum, John J. Coyle, C. B. Paul, George R. McKay, J. E. Williams, James 
M. Godell, B. W. Blanchard (editor and writer and chicken fancier), A. L. Craig, 
Frederick Gaston, J. L. Rose, G. J. Eblen, Orman Kennedy, J. H. Burtner, E. E. 
Burson, J. F. Taake, T. B. Hanley, E. L. Balz, Lee W. Squier, C. B. Gardner, W. R. 
Eidson, George A. Scott, J. C. Desaulmiers, and Henri Roy. At the succeeding meet- 
ing there came into prominence William Koch, W. E. Davy, Robert Rexdale, Miss 
Annie O'Connor, J. S. Dailey, Chas. F. Hatfield, M. L. Campbell, H. E. V. Porter, 
G. L. Peterson, J. L. Mitchell, N. J. Hein, J. F. Sherer, E. W. Donovan, Hugh R. 
Moffit, and C. E. Corlett. 

Each meeting was an interesting one. Valuable papers and intelligent discussion 
never failed to< make the annual Conventions notable. From the beginning valuation 
and adequate rates were popular topics. There was opposition to what was charac- 
terized as the "Force 'Bill" of the National Fraternal Congress, but there was no 
opposition to the proper provision for benefits promised. 

The Associated Fraternities adopted a "Uniform Bill" and urged it vigorously 
as a substitute for that advocated by the National Fraternal Congress. 

The Insurance Commissioners generally stood with the Congress and the Congress 
Bill was enacted into law in several States during the decade 1901-1910. 

On the whole, little progress was made in securing desirable legislation during 
the ten years because of the disagreement between these two National Fraternal Organ- 
izations. 



75 

Each year there were conferences between the representatives of the National 
Fraternal Congress, the Associated Fraternities and the Convention of Insurance 
Commissioners, and sometimes there was a tentative truce and sometimes there were 
discouraging dissensions. 

The Commissioners would become impatient and undertake to draft their own 
Uniform Bill, and once (at Baltimore, in 1903) -framed a bill which made the Actuaries' 
Combined Experience Table of Mortality the standard for "minimum" rates. 

There arose such differences over the question of rate legislation that several so- 
cieties withdrew from the National Fraternal Congress and became identified with 
Associated Fraternities of America. Amongst them were the Woodmen of the World 
and the Modern Woodmen of America, two of the largest Societies in America. 

I witnessed division amongst my friends and clients, and, though to my disadvan- 
tage in a business way, my convictions forced personal participation in the debates 
as well as in the conferences, and thereby at least I had the advantage of first-hand 
knowledge of all circumstances and conditions affecting and incident to the Fraternal 
System during this turbulent period. 

My purpose from the beginning of my activity was to benefit the cause, and in 
carrying out this purpose I have often done and said things which resulted in the loss 
of patronage of Societies whose officials were close and esteemed friends. I men- 
tion this fact to indicate the spirit of the times in that a man should become thus 
involved who never had any official connection with any Society and whose pro- 
fessional interest would have been conserved best by maintaining pleasant business 
relations with all factions. 

While not always in complete accord with the majority in the National Fraternal 
Congress, yet I conscientiously believed that it could accomplish greatest good for the 
Fraternal System and therefore I supported its policies. Notwithstanding this atti- 
tude, the Associated Fraternities of America always welcomed me to their meetings 
and, by invitation, I furnished papers for their proceedings and took part in their 
deliberations, and served many of the constituent Societies as an Actuary. This is 
recorded as an expression of appreciation. 

From ''Statistics Fraternal Societies," published by the Fraternal Monitor, and 
giving returns to January 1, 1913, I extract the following concerning Fraternal Ben- 
1 eficiary Societies : 

Number of Beneficial Members 7>45 I >735 

Number of Social Members 420,848 

Total Number of Members 7,872,583 

Total Number of Lodges 1 16,732 

Protection in force January 1, 1913 $9,128,191,000 

Benefit paid in 1912 95,34i>585 

Total Assets 191,278,819 

Total Liabilities 21,408,506 

Total Income in 1912 128,156,023 

Total Disbursements in 1912 109,370,581 

Members Introduced in 1912 963,494 

Protection written in 1912 $974795,500 

Following is a list of the Societies doing business in 1912, and the years in which 
they were organized : 

Date organized. 

Order Brith Abraham (U. S. Grand Lodge) 1859 

L'Union St. Joseph du Canada 1863 



7 

Catholic Family Protective Association 1868 

United Workmen, Ancient Order of 1868 

♦Masonic Mutual Life Association 1869 

Independent Order Free Sons of Israel 1871 

United Workmen, Ancient Order of (New York) 1873 

Artisans' Order of Mutual Protection 1873 

Knights of Honor 1873 

. Brotherhood of Local Firement and Enginemen 1873 

♦Odd Fellows Relief Association of Canada. 1874 

♦Independent Order of Foresters 1874 

United Workmen, Ancient Order of (Illinois) 1875 

♦United Order of Golden Cross • • 1876 

♦Catholic Mutual Benefit Association 1876 

♦United Workmen, Ancient Order of (Minnesota) 1877 

^Catholic Knights of America • 1877 

""Royal Arcanum 1877 

♦Societe des Artisans Canadiens-Francais, La 1877 

Knights and Ladies of Honor 1877 

♦Knights of Pythias (Insurance Department) 1877 

"'Western Catholic Union 1877 

♦Improved Order of Heptasophs • 1878 

'""Order of Mutual Protection 1878 

Order of Scottish Clans • • 1878 

* United Workmen, Ancient Order of (Washington) 1879 

United Workmen, Ancient Order of (Kansas) 1879 

♦United Workmen, Ancient Order of (Ontario) • 1879 

United Workmen, Ancient Order of (Massachusetts) 1879 

^United Order of the Pilgrim Fathers • • 1879 

Iowa Legion of Honor 1879 

Legion of Honor of Missouri 1879 

♦Roman Catholic Mutual Protective Society 1879 

Mutual Aid Society of the German Lutheran Synod 1879 

Massachusetts Catholic Order of Foresters • • 1879 

( Canadian Order of Foresters 1879 

( )rder of Sparta 1880 

♦Catholic Mutual Benefit Association of Canada 1880 

♦Polish National Alliance 1880 

♦National Union 188 

: Knights of the Modern Maccabees 188 

Knights of Father Mathew : 188 

Catholic Benevolent Legion 188 

rman Roman Catholic Knights of St. George 188 

"Knights of Columbus 1882 

( lerman Baptists 1 Life Association 1883 

♦Modern Woodmen of America • 1883 

♦Knights of St. John and Malta 1883 

••Catholic Order of Foresters ....•• 1883 

♦Knights of the Maccabees of the World 1883 

! .egion of the Red Cross 1883 

Brotherhood of Railroad Trainmen 1883 

♦Royal 1 «eague . . • • 1883 

: Royal Templars of Temperance ( Canada) 1884 

Order of Canadian I Ionic ( ircles 1884 

♦Workmen's Sick and I Hath Benefit Fund of the U. S. A 1884 

Fraternal Mystic Circle [885 

Catholic Knights of Wisconsin 1885 

Christian Burden Bearers' Association 1885 

* Shield of 1 [onor • 1885 

Order of Canadian Home Circle 1885 

Grand Fraternity, The 1886 

♦] .adies of the Modern Maccabees 1886 



77 

"'Empire State Degree of Honor 1886 

United Workmen, Ancient Order of (Nebraska) 1886 

*Protected Home Circle • • 1886 

♦Degree of Honor, A. O. U. W. of Kansas 1887 

Independent Order of B'rith Abraham 1887 

Canadian Order of Chosen Friends 1887 

♦New England Order of Protection 1887 

United Commercial Travelers, Order of 1888 

♦United Workmen, Ancient Order of (South Dakota) 1889 

♦Loyal Association 1889 

Indeepndent Order Free Sons of Judah 1890 

National Slavonic Society of U. S. A 1890 

♦Ladies' Catholic Benevolent Association 1890 

Catholic Knights and Ladies of America 1890 

♦Woodmen of the World (Pacific Jurisdiction) 1890 

Brotherhood of America 1890 

♦Fraternal Aid Association 1890 

♦National Protective Legion 1890 

♦Woodmen of the World (Sovereign Camp) 189 

Order of the Amaranth 189 

United Aid • 189 

♦Women's Catholic Order of Foresters 189 

♦U. S. Letter Carriers' Mutual Benefit Association 189 

Catholic Knights of Ohio 189 

United Workmen Ancient Order of (New Jersey) 1892 

♦Knights and Ladies of Security 1892 

United Workmen, Ancient Order of (Oklahoma) 1892 

^German Beneficial Union 1892 

Bohemian Salvonian Union . 1892 

♦Ladies of the Maccabees of the World 1892 

Union Fraternal League • 1893 

American Benefit Society 1893 

Catholic Relief and Beneficiary Association . 1893 

Loyal Mystic Legion of America 1893 

Independent Scandinavian Workingmen's Association 1893 

♦United Order of Foresters 1893 

v Alliance Nationale 1893 

Workmen's Benefit Association 1893 

Woodmen of the World (Canadian Order) 1893 

United Workmen, Ancient Order of (Iowa) • • 1893 

♦Ben-Hur, Supreme Tribe 1894 

American Insurance Union • 1894 

♦Ancient Order of Gleaners 1894 

♦United Artisans 1894 

♦National Benevolent Society 1894 

Continental Beneficial Association 1894 

United Workmen, Ancient Order of (West Virginia) 1895 

'^Loyal Guard, The 1895 

"Life and Annuity Association 1895 

Royal Neighbors of America • • 1895 

North American Union 1895 

United Workmen, Ancient Order of (N. Dakota) 1895 

♦Court of Honor • • 1895 

♦Order of Columbian Knights 1895 

♦Catholic Women's Benevolent Legion 1895 

♦Woodmen Circle 1895 

United Benevolent Association 1895 

♦Fraternal Brotherhood • 1896 

♦Mystic Workers of the World 1896 

Order Knights of Joseph 1896 

♦Degree of Honor, Superior Lodge 1896 



7.8 

*Royal Highlanders • 1896 

♦Fraternal Union of America 1896 

Eastern Star Benevolent Fund of America 1896 

Catholic Ladies of Columbia 1896 

Occidental Mutual Benefit Association 1896 

♦Loyal Americans of the Republic 1896 

^Association Canado-Americaine • • 1896 

*Sons and Daughters of Justice 1897 

*Modern American Fraternal Order 1897 

♦Brotherhood of American Yeomen 1897 

*Women of Woodcraft 1897 

♦Modern Brotherhood of America 1897 

♦Mutual Protection League 1897 

Modern Samaritans • • 1897 

Western Bohemian Fraternal Association 1897 

^Equitable Fraternal Union • 1897 

Patricians, The 1897 

♦New Era Association • • 18^7 

Royal Benefit Society 1897 

Order of the Iroquois 1898 

♦Yeomen of America 1898 

United Workmen, Ancient Order of (Arkansas) 1898 

♦Modern Order of Pratetorians 1899 

♦Home Guards of America 1899 

Fraternal Reserve Life Association 1899 

*Mystic Toilers • • 1899 

North Star Benefit Association 1899 

Daughters of Columbia 1899 

United American Mechanics, Jr. Order (Ben. Deg.) 1899 

Order of the White Cross 1900 

Catholic Benevolent League of Indiana 1900 

United Order of the Golden Star 1900 

Fraternal Benefit League 1900 

Workmen's Circle 1900 

L'Union St. Jean-Batiste d'Amerique • 1900 

♦Fraternal Bankers' Reserve Society 1901 

"'Heralds of Liberty 1901 

Gold Reserve Life Association 1901 

American Woodmen 1901 

♦Vesta Circle 1901 

United Amer. Mechanics, Jr. Order (Funeral Ben. Dept.) 1901 

United Workmen, Ancient Order of (Conn.) 1901 

Beavers Reserve Fund Fraternity 1902 

Order of the Golden Seal • 1902 

""National Americans 1902 

^National Fraternal League 1902 

♦Fraternal Reserve Association 1902 

♦Aid Association for Lutherans 1902 

independent Order of Puritans 1903 

Lone Star Insurance Union 1903 

American Stars of Equity 1903 

♦Columbian Woodmen 1903 

Lincoln Annuity Union . 1903 

Modern Romans 1904 

Kinsmans Mystic Senate 1904 

♦Farmers 1 Life Insurance Association 1905 

Knights of Industry 1906 

Independent Workmen's Circle 1906 

"Homesteaders, The 1906 

National Home Guard • • 1906 



79 

Daughters of America 1907 

Order of Aztecs • • 1907 

National Fraternal Society of the Deaf 1907 

Union Fraternal Association 1908 

Home Watchmen of the World T908 

♦Benevolent Knights of America 1908 

Texas Commercial Union 1908 

* American Workmen 1909 

♦Southern Benevolent League 1909 

Columbian Fraternal Association 1910 

*Our United Brotherhood • • 1911 

*Cycle of Equity 191 1 

Southern Woodmen • • 191 1 



♦Societies that have employed Mr. Landis. The following* have also engaged his 
services as an actuary, though their names do not appear in the Monitor list, making 
a total of 143 that he has served in a professional capacity. 

♦The Sailors. 

'"Colorado Grand Lodge Degree of Honor. 

♦International Liberty Union. 

♦Independent Order Shield of Honor. 

*St. Lawrence Life. 

^Common Brotherhood of America. 

*Young Men's Mutual Life Association. 

*U. S. Civil Service Retirement Association. 

♦American Union. 

international Ladies' Garment Workers' Union. 

♦Independent Western Star Order. 

♦Guild of the East. 

♦National Protective Association. 

♦Catholic Knights of Illinois. , 

*Loyal Protective Ins. Co. 

♦United Order Hotel Workmen. 

♦Knights of Agriculture. 

♦United National Association of P. O. Clerks. 

♦Southern Ins. Union. 

*U. S. Postoffice Clerks' Mutual Benefit Association. 

♦Birds of Freedom. 

♦Methodist Ministers' Relief Association. 

♦Modern Protective Association. 

-'Fraternal Relief Association. 

♦National Annuity. 

♦National Mutual Relief Association. 

*Masons' Annuity. 

♦The Pathfinders. 

♦American Guild. 

^Keystone Guard. 

♦Mason's Mutual Aid Association. 

♦National Croation Society. 

♦Mutual Aid Society of Lutherans. 

*A. O. U. W. Grand Jurisdiction of Tenn. 

♦Army Aid Association. 

♦Stork Fraternal Society. 

♦Washington League of Knights and Ladies. 

-Highland Nobles. 

♦Railway Postal Clerks' Association. 

♦Western Commercial Travelers' Association. 

*The Americans. 

♦Modern Knights of the American Home. 

♦Methodist Benevolent Association. 

♦Lincoln Fraternal Union. 



80 

LIFE INSURANCE COMPANIES. 

Running through the entire history of the development and supervision of Fra- 
ternal Beneficiary Societies there is prominent the sentiment amongst fraternal 
officials that the regular life companies — "the Old Line Companies" — are continually 
lying in wait for the destruction of the Fraternal System. 

The fraternal speakers and writers of papers, as seen from many previous quota- 
tions, characterize the life companies as "our common enemy," as "our natural 
enemy," as "our insidious foe," as "the instigator of ruinous legislation," as "a secret 
enemy always to be watched." 

Even the judicial mind of Chairman Butler was influenced by the prevailing senti- 
ment and uttered warnings against the life companies as the ever-present and con- 
trolling power over commissioners and legislators to the injury of fraternal orders, 
notwithstanding his candid admission that he had no evidence to support his suspicions. 

For twenty-five years I have given exclusive attention to the interests of Fraternal 
Beneficiary Societies, but I have not neglected the opportunity to cultivate the 
acquaintance and seek the friendship of the actuaries of the life companies, and I 
have met and known many of the executive officers of those companies. Like Chair- 
man Butler, of the Committee on Legislation, I have never been able to find any 
evidence that the life companies desired or connived at the ruin of Fraternal Bene- 
ficiary Societies ; unlike Brother Butler, I have never suspected something unsup- 
ported by evidence. 

The facts are that the executive officers of life companies have given very little 
thought to the Fraternal Beneficiary Societies. They know in a general way of the 
existence of fraternal orders, but the fraternal people would be surprised to learn 
how little they really know of the work of these great provident institutions, and 
what little consideration they have given to them. 

The idea of antagonism has arisen from the action of field men and the insurance 
press which has followed agency criticism. 

Those who live by commissions on business written necessarily must get business 
to live, and they have taken advantage of the defects and weaknesses of the fraternals 
to criticise them and divert business from them. It is the exception when the 
management of a life company has supported or encouraged the attacks made by 
agents, or the criticism indulged by the insurance papers. 

But in respect of the action and attitude of the agents and insurance papers 
have they in fact misrepresented the Fraternal Societies? Have not the Societies 
given cause for criticism and laid themselves liable to attack? 

Instead of pleading the baby-act, would it not have been better to have removed 
the cause of criticism and manfully met competition on a business basis? 

Would it not have been better for the Societies that all of us, who have at heart 
their real interests, should have long ago acknowledged defects and sought their 
remedy rather than to complain of criticism and yet continue wrong methods? 

Should we not, years ago, have acknowledged that the Societies were doing a life 
insurance business, instead of straining after distinguishing differences that would 
not stand the test of common sense analysis? 

Should we not, years ago, have recognized the common sense principle that busi- 
ness methods alone will assure the success of a business enterprise, and have gone 
about this business of life insurance in a business-like way, and have prepared our 
organizations for any legitimate business competition, as well as have prepared our 
organizations for the performance of their promises? 



81 

In the eventful year of 1901 I urged upon the attention of the National Fraternal 
i Congress the necessity for valuation — for taking an account of assets and liabilities — 
but my urgency was of no avail. The fraternal managers waited until conditions 
forced the agreement, at Mobile in 1910, concerning valuation. 

Four years after 1901 I made an effort to secure action looking to legislation 
that would permit Juvenile Insurance, and the Committee on Statistics and Good of 
the Orders prepared a report from facts given by me, urging this matter upon 
the attention of the Congress ; but fraternal managers passed it by, until now condi- 
tions make the need of it felt. 

And now comes up the matter of "Group Insurance," and instead of recognizing 
its good features and securing legislation that will prevent Fraternal Beneficiary 
Societies from entering upon that method of granting protection, we hear nothing 
but criticism, and the old, old cry that it is a scheme of the "Old Line Companies" 
to ruin the Fraternal Socieies. 

My faith in the Fraternal System is so strong that I believe Fraternal Beneficiary 
Societies can adopt contribution rates as high as the highest premium rates of any 
life company and can do business under them ; that they can bring their financial 
position to the valuation standard required of life companies; that they can make 
a greater success with child insurance and group insurance than can the life companies. 

My faith in the Fraternal System is so strong that I believe that they can do 
without legislative favors and exemptions on the assumption and under the pretense 
,of being "charitable and benevolent institutions" (see N. Y. Conference and other 
: , Uniform Bills) in respect of their funds and their insurance business. 
\ Why this faith? 

Because mutual cooperation is of the very essence of insurance protection and 
the most complete and effective cooperation is possible through the means at the 
command of the Fraternal Beneficiary Societies. 

The life company organization is entirely void of the inherent power and cohesive 
1 character of the fraternal society. 

Having had to do with the attempt at reconstructing the financial methods of more 
" than one hundred of these societies, I am in position to speak advisedly of the 
advantages (and sometimes disadvantages) of local lodges, ritualistic forms and rep- 
j resentative government. 

My faith is based upon facts as I have dug them out of the experiences of these 
societies through personal investigation, and as I have obtained them from the in 
vestigations of others. 

From my viewpoint, there is no doubt of the superior strength and efficiency given 
to cooperation through sound and safe business methods being combined with the 
fraternal, social and charitable features of the provident societies. 

The adoption of "Group Insurance" by purely business corporations is convincing- 
evidence of the appreciation by shrewd business men of the desirability of com- 
munity cooperation. 

Why managers and members of Fraternal Beneficiary Societies neglect the full 
advantage of such a combination of business and fraternity as is within their grasp 
will remain one of the mysteries of development and progress through human agencies. 

It is not altogether dear in my own mind that I should have written this preface 
to the chapter of comments on Life Insurance Companies. Pertinent or not, I will 
let it stand. 



82 



Historical. 



A detailed history is not intended ; only brief references to the past shall be made 
in order to give the reader some idea of the 'period covered by the business of insur- 
ance in general and of life insurance in particular, and to establish the fact that 
the business itself is very simple and had its origin, not among the learned nor the 
"Napoleons of Finance," but among the common, working people. The conception 
of life insurance was not in the brain of any great philosopher, but came to the 
mind of the meek and lowly from promptings of brotherly love. It was not a product 
of the head, but of the heart. 

Like religion and charity, insurance has been much abused, largely misused and 
greatly diverted from its original purpose of benefiting the masses through mutual 
cooperation. 

The proper application of the principle of cooperation to life insurance has never 
been thoroughly understood by all who have appreciated the great power of the 
principle itself. This ignorance has been the cause of many failures of well-inten- 
tioned projects, as well as the cloak for hundreds of fraudulent schemes and specula- 
tive and disastrous ventures. 

Through cooperation large sums can be accumulated by small contributions from 
each of a great many subscribers. If, by any means, a few persons can induce many 
other persons to favor them with such contributions, it is possible for each of the 
few to become enriched without any great burden upon or sacrifice from the many. 

Again, if many persons will each make a small contribution to a general fund, 
and have such fund judiciously invested and managed, it is possible to so improve 
it as to give larger returns to each subscriber than he could have realized from 
earnings on the amount of his original contribution when separately invested. 

Just as it is possible for a number of men united to do what one cannot per- 
form, so, within limits, the aggregate use of many dollars will enable persons to take 
advantage of opportunities for investment and profit which are entirely beyond those 
who have only one dollar. 

Recognition of the last proposition brought about Savings Banks, Building and 
Loan Associations and similar provident institutions. 

Recognition of the first proposition has been responsible for some of the best and 
some of the worst cooperative organizations conceivable. 

Where the suffering few have been relieved by the benevolent many immeasurable 
good has resulted. 

Where the greedy and selfish few have profited by the pennies, nickles and dimes 
squeezed from the hard earnings of the impoverished many the most damnable of 
outrages have been perpetrated. 

Life insurance has been established upon that principle of cooperation where the 
many contribute for the benefit of -the few and whether or not the business of life 
insurance is of public utility or detriment depends upon the character of the few 
who profit from the contributions of the many. 

When the few are widows and orphans saved from penury and want, then un- 
qualified good comes from the contributions of the many. 

The science of probabilities furnishes the basis for computations that render the 
business of life insurance safe and successful, and it requires very little alteration 
in mathematical formulas to make them apply as well to gambling and speculative 
contracts as to the chance of paying a death claim under an agreement that would 
alone benefit women and children. 



83 

When the science of chances and probabilities is employed to work out a scheme 
of mutual cooperation where indemnity for loss of support through the death or 
disability of the wage-earner is the prime object to be attained, then the result of 
operation makes it possible for men of limited means to assure protection to their 
families against want and deprivation, though life or health fail before other pro- 
vision has been made for them. 

When the same science is employed in the formulation of plans where the chances 
to benefit are in favor of the wealthy who are able to persist to the end of a tontine 
or accumulation period when a distribution of forfeited payments is made, then 
the result of operation degenerates into a gamble and demoralizing speculation. 

I wish that space were alloted and the patience of close reading assured for a com- 
prehensive presentation of the effects of cooperative effort during the last two hun- 
dred years. 

The scope of the present-day insurance is broad and comprehensive, but we are 
not yet returned to the point of reckless risk which characterized the business in 
England just prior to the "Bubble Act" of 1719. Cornelius Walford thus describes that 
extravagant era of taking chances. 

We should simply subject ourselves to the charge of romancing if we were, thus 
early, to rend aside the veil of a century, and assert the existence of companies for 
Insuring against Housebreakers and Highwaymen — against lying, or death by drink- 
ing Geneva! Yet the climax of that period (the era of the South Sea Bubble) was 
only reached by a scheme in "Change Alley" for the insurance of female chastity, 
and another against divorces ! 

Walford designates the period from 1698 to 1760 as the era of "Speculative Assur- 
ance." It is worth while to give an idea of those times by quoting what he says of 
them : 

That which strikes the historical reader as one of the most remarkable features 
of the times is the purposes for which many of the so-called Assurance Offices were 
got up. Here we find "A Mutual Assurance Company was formed to aid an adven- 
turer with funds to raise a vessel which, laden with the treasures of the East, had 
been lost on her passage home ; the peculiar features of the transaction being that 
if any of the association should die before the object was accomplished, their share 
was to be transferred to the remaining adventurers." This made the hazard a donbl- 
one. Another company, having at its head three English peers, two bishops, four 
Irish peers, with many eminent merchants and gentlemen, petitioned the king that 
it might be incorporated for purchasing and improving forfeited and other estates 
] in Great Britain, for granting annuities, and for insuring lives; seeing this will (were 
the words of the petition) unite by interest many of the King's subjects against the 
Pretender and his adherents forever. 

But the distinguishing feature of the age was the "gambling" tendency of nearly 

all the offices. Under the title of "Insurance Wagers," every conceivable description 

of speculation was entered into. On one day we find the offices wagering £30 

against £100 that King William could not reduce the City of Namur before a given 

date. The next, on the period of favor to be enjoyed by the mistresses of some 

foreign potentate. And the third day, on the sex of the Chevalier D'Eton, whether 

I he was a male, as he pretended to be, or a female, as he was reputed to be. The 

duration of the lives of persons believed to be on their death bed was a common 

! hazard; and the author of "Every Man His Own Brother" was not far wrong when 

j he said the dissolution of persons, who saw themselves insured in the public papers 

at 90 per cent, was, not unlikely, hastened by such announcements. 



84 

The "Gambling Act," in the reign of George III., put an end to such preposterous 
undertakings. 

It enacted that no insurance shall be made on the life of any person, or on any 
event whatsoever, where the person on whose account it shall be made shall have 
no interest, or by way of gaming or wagering; and that every such insurance shall 
be null and void. It further provides that it shall not be lawful to make any policy 
on the life of any person, or on any other event, without inserting therein, for 
what use, or on whose account such policy is so made ; and where the insured has an 
interest in such life or event no greater sum shall be received from the insurer than 
the amount of the interest of the insured in such life or event. 

From 1760 to 1815 the time has been called the "Transition Period" of life in- 
surance. 

In 1762 the Equitable Society was organized in England with an effort at scientific 
accuracy and for the purpose of protecting dependants from the loss of support by 
the death of the breadwinner. The contracts of insurance were entirely devoid of any 
investment, speculative or gambling features, there being no other inducement to be- 
come a member than the offer to pay a stated sum to named beneficiaries upon the 
event of death. Several other companies and societies were started prior to 1815, 
and an earnest investigation of mortality experiences was begun. Many friendly 
societies were organized, and altogether this period was marked by honest endeavor 
to place life insurance upon a sound, safe and conservative basis with an eye single 
to the good of the members. The character of the business is reflected in the petition 
for a charter of the Equitable Society when setting forth the purpose of the organi- 
zation as follows: 

That great numbers of H. M.'s subjects whose subsistence principally depends on 
the salaries, stipends, and other incomes payable to them during their natural lives, 
or on the profits arising from their several trades, occupations, labor and industry, 
are very desirous of entering into a society for assuring- the lives of each other, in 
order to extend, after their decease, the benefit of their present incomes to their 
families and relations, who may otherwise be reduced to extreme poverty- and dis- 
tress by the premature death of their several husbands, fathers and friends, which 
humane intention the petitioners humbly apprehend cannot be effectually carried 
into execution without H. M.'s Royal Authority to incorporate them for that purpose. 

Walford designates the period of 1816-1844 as the "Golden Age of Assurance 
Companies in Great Britain." Contrasting the period and the companies with those 
that had gone before, he says : 

To speak of this as the Golden Age of Assurance Companies may seem to dis- 
parage those societies established at earlier dates. Our intention is not to do this. 
Indeed, those early companies which are still existing speak for themselves ; they 
have all attained high positions despite the difficulties they had to encounter, and 
the doubt which, for a time, surrounded them. Of those still earliest societies, which 
have, happily, long since passed away, Dr. Price truly said that to call them imposi- 
tions on the public, proceeding from ignorance, and supported by credulity and folly, 
was "too gentle a censure." But we shall be fully able to justify our position by 
a review of the advantages the companies of this period possessed over those which 
preceded them. 

These advantages may be ranged under several heads. First, and chiefly, the 
more accurate data which scientific investigation had placed at their disposal. Next, 
the rapid improvement which had been made, and was still taking place, in the mor- 
tality of the kingdom. Third, the legislative encouragement which had then been 
newly bestowed upon life assurance. And, lastly, as rising out of all these, the 
improved public feeling which had set in in favor of such companies. 



85 

Although two or three British companies accepted some American risks, and the 
Pennsylvania Company for the Insurance of Lives and Granting of Annuities had 
commenced business in 1812, yet the real beginning of life insurance in the United 
States dates from the last year of this ''Golden Age" in Great Britain, when the 
Mutual Life of New York actively entered the field. By 1847 the New York Life, 
New England Life, the Mutual Benefit, the State Life, the Connecticut Mutual, ancj 
Penn Mutual had commenced business, and it may be* said that life insurance opera- 
tion in this country had been successfully started. 

In England the business had so far progressed that designing persons recognized 
the opportunity for turning it to selfish ends, and scores and hundreds of companies 
were set afloat and the undertakings rivaled those of the previous century. Walford 
stamps the period 1844-1862 as that of "Bubble Companies." He writes : 

The period we have just passed over did much to popularize the practice of Life 
Assurance in this country. The speculative companies of a former period had passed 
out of memory. The principles of the existing offices were fast becoming consolidated ; 
and the companies themselves recognized as amongst the most valued monetary 
institutions of the country. The magnitude of their transactions was only equalled 
or surpassed by those kindred institutions, banks ; and the promptitude with which 
they met their engagements deservedly placed them high in public confidence. It 
was not to be supposed that such a state of things could long continue without a 
"dark side." Those who know most of human nature know, and deplore, that the 

* best of institutions are the most liable to abuse. This has been proved more than 
once in the history of Life Insurance. The favorable results which have been 
achieved by sound management of the old offices — more particularly the bonuses 

1 of the equitable, which public rumor had extended even beyond their almost fabulous 

I reality, had, coupled with a want of popular and correct knowledge of the principles 
and practice of Life Assurance, raised public expectation to a high pitch. To this 
circumstance, combined with the unlimited confidence before referred to, must we 

1 look for a solution of that blind reliance which was placed in many of the swindling 
schemes which were brought forward in the earlier years of the period we are 
entering on, and in the numerous abortive projects whose concoct or s, after exhausting 

I the large funds placed at their disposal, have left their dupes to ascertain the extent 
of their remaining liabilities through communications made to them by the officials 
of the Court of Chancery. 

In "Martin Chuzzlewit," Charles Dickens graphically describes the offices of one 
j of the "Bubble Companies," and gives an insight into the methods of business opera- 
1 tion and the designs of the promoters. 

Considerable space has been devoted to the early history, development and abuse 
; of life insurance in Great Britain, because American companies were formed upon 

ithe English model, and naturally we could expect a repetition of the history, develop- 
ment and abuse of the business in this country, since human nature is virtually the 
same on both sides of the Atlantic. 
It might be interesting and instructive to follow the history of the British com- 
panies after the Act of 1870, and it would be a lesson for American policy-holders 
to study a comparison that could be made between business managements of English 
and American companies. However, attention will now be confined to conditions 
in the United States, which directly and materially concern those for whom I am 
I writing. 

Several companies did a life insurance business in a limited way prior to 1842, 
but the real beginning was in 1843, when the Mutual Life of New York entered the 
field with premium rates based upon the recently published English Table of Mor- 
1 tality, which had been constructed (in 1838) from the combined experience of seven- 
teen British and Scottish life offices. Up to 1861, at the beginning of the Civil War, 



86 

twenty-seven life companies had been formed and were in active operation. Several 
others had been chartered, and some of them were doing a local business, but the 
following are worthy of mention, all but four of them (marked with *) being now 
(1914) in operation. Two of the three, the New York Life Insurance & Trust Com- 
pany and the Pennsylvania Company for Insurance of Lives and Granting Annuities, 
never did a large life insurance business, and both finally discontinued that branch and 
confined themselves to transactions as trust companies. The names, dates of organi- 
zation and location of the twenty-seven follow : 

Organized. 

1. Presbyterian Minister's Fund, Philadelphia 1759 

2.* Penna. Co. for Insur. of L. & Granting An., Philadelphia 1812 

3.* N. Y. Life Ins. & Trust Co., New York City 1830 

4. Mutual Life Insurance Co., New York City 1842 

5. New York Life Ins. Co., New York City 1843 

6. New England Mutual Life Ins. Co., Boston 1843 

7. State Mutual, Worcester, Mass 1844 

8. Mutual Ben. Life Ins. Co., Newark, N. J 1845 

9. Conn. Mutual Life Ins. Co., Hartford, Conn 1845 

10. Penn. Mutual, Philadelphia • 1847 

11. Union Mut. Life Ins. Co., Augusta, Me 1848 

12. National Life Ins. Co., Montepelier, Vt 1848 

13.* Charter Oak Life Ins. Co., Hartford, Conn 1848 

14. U. S. Life Ins. Co., New York City 1850 

15. Manhattan Life Ins. Co., New York City 1850 

16. Berkshire Life Ins. Co., Pittsfield, Mass 1850 

17. Mass. Mutual Life Ins. Co., Springfield, Mass 1851 

18. Phoenix Mutual Life Ins. Co., Hartford, Conn 1851 

19. Aetna Life Insurance Co., Hartford, Conn 185 1 

20.* Knickerbocker Life Ins. Co., New York City 1853 

21. German Mutual, St. Louis, Mo 1857 

22. Northwestern Mutual, Milwaukee, Wis 1857 

23. Equitable Life Assurance Soc. of U. S., New York 1859 

24,* Guardian Mutual Life Insurance Co., New York 1859 

25. Washington Life Insurance Co., New York i860 

26. Home Life Insurance Co., New York i860 

27. Germania Life Ins. Co., New York i860 

The years between 1842 and 1861 constituted the "Formative Period" of life 
insurance in the United States. The managers learned very little from the extended 
experience of companies in England, and there was much ignorance in management in 
respect of a sufficient accumulation for the protection of contracts. The taking of 
premium notes was a popular feature. Dividend "credits," or "certificates," was 
another feature that was condemned by experience. To indicate the crude notions 
of an adequate reserve the following is taken from the charter of the Home Life, 
as published in the 1867 report of the New York Insurance Superintendent : 

The net profits are to be ascertained annually and such a proportion thereof as 
the board may determine shall be applied towards the accumulation of a reserve 
fund of $200,000, and the remainder shall be apportioned to participating policy-holders. 

There were no effective laws requiring valuation, and those companies which 
voluntarily made a valuation used six and seven per cent interest assumption. How- 
ever, the companies were honestly and conservatively managed and remedies were 
applied as defects were disclosed by experience and practical operation. 

In the decade 1861-71 hundreds of new companies were projected and started and 
the methods of the "Speculative Period" in England held sway. 



87 

The Insurance Superintendent of the State of New York, George W. Miller, in 
his report for the year 1871, under the heading of "Retrospective," wrote: 

The last year has witnessed the continued development of the effects of the two 
policies which have prevailed in the management of companies, and in the conduct 
of the Insurance Department of this State. Prior to 1870 the business of life insur- 
ance had experienced an extraordinary if not a forced and unnatural growth. Many 
causes conduced to this result, among which was the policy, or want of policy in 
the administration of this department. Every facility and inducement for the organi- 
zation of new companies with small capital was held out, whilst little, if anything, 
was done practically to prevent the inception and spread of practices and abuses 
which could lead to but one result — insolvency. From this inevitably follows dis- 
solution, disappointment and depression. The state of the country, the inflation of 
the currency, and the general tendency to a profligate and abnormal conduct of all 
kinds of business, required the exercise of extraordinary intelligence and vigilance in 
the supervision of insurance, which unfortunately was not to be found in the New 
York department. The companies flourished, the department flourished ; even the 
Superintendent flourished, and "all went merry as a marriage bell." Company after 
company was organized, office after office was opened with a display of gilded signs 
and luxurious furniture, which almost compelled the belief that the description of 
them, in Dickens' Martin Chuzzlewit, was intended as a satire upon American rather 
than British institutions. 

The formation of companies, too many of which were faithfully photographed by 
Dickens, went on, until from seventeen which were doing business in this State upon 
the organization of the department in i860, eight of which were New York companies, 
the number had become seventy-one in 1870, when the first Superintendent retired 
from office, forty-one of which were New York companies. In 1870 times had 
changed. With the change in the times came a change in the administration and 
policy of the department. The pretentious display of figures made by these gilded 
institutions, and published in the official annual reports, were at last to be brought to 
a practical test. That test, a thorough personal examination, in its first application 
revealed a rottenness truly startling. 

Orlow W. Chapman succeeded Mr. Miller as Superintendent, and, in his report 
for 1872, he said : 

The teachings of the past fourteen years' experience, although by no means con- 
clusive are certainly interesting, important and highly suggestive. They indicate 

, nothing against the wisdom or policy of life insurance, or the theory upon which 
it is based, or the beneficence of the system. On the other hand, when it is found, 
as facts show, that some of the companies entering into this aggregate, in the face 
of this discouraging downward tendency, have maintained a constantly increasing 
growth year after year, it presents something like a demonstration of the wisdom of 
its plans and correctness of its theories. For surely that business which is shown 

ito be capable of steady and uninterrupted advancement in times of trial, such as life 

,' insurance has passed through during the last few years, must have in it the very 

strongest elements of prosperity, of safety and of merit. 

i 

I John A. McCall, President of the New York Life Insurance Company, read a paper 
in 1898 before the National Convention of Insurance Commissioners in which he 
reviewed their history from 1871 to 1898. Following are some extracts from his paper: 

At the time of the meeting of the First Convention of Insurance Officials, in May, 
/1871, American Life Insurance had passed through two distinctive periods, and had 
nearly reached the end of the third. In the first period life insurance was done 
almost entirely by proprietary companies, organized primarily for the transaction of 
fire insurance, banking and trust business. Following this came the period of the 
early mutuals and other profit-sharing companies, doing a life insurance business 
exclusively. The marked success of these organizations between 1843 and 1862 



exe 



caused a great multiplication of life companies. Life insurance shared the fate of 
other industries of the time — flourished and grew with them, as later it suffered 
with them. 

The nine years immediately following the First Convention must be accounted 
the most trying period in the history of American life insurance. The number of com- 
panies which ceased doing business in New York was forty-six. Only four reinsured 
in companies that remained solvent; only ten others paid their liabilities in full. 
Receivers' reports are incomplete, but a careful examination of such as are accessible 
show the total loss to policy-holders by failures among American life companies to 
be about thirty-five million dollars, nearly all of which occurred during this period. 

The situation was more acute in New York than elsewhere because, of the forty- 
six companies which ceased doing new business, twenty-seven had their domicile in 
that State. 

The loss to solvent companies of business, as well as the prestige during this 
period, was very great. 

It has been the custom of writers who would exalt life insurance to give scant 
space to the discussion of the failures and losses of this period; but to my mind 
there is no period in life insurance history that deserves more careful study, and 
none that contains more valuable lessons to the life insurance managers. Why did 
these companies fail? A true and complete answer to that question would put every 
officer and every trustee of a life company on his guard against like causes and a 
like catastrophe. As we have already seen, these failures were contemporaneous 
with many other failures in the business world, and something must unquestionably 
be allowed for the great shrinkage in values, as measured by the currency of the 
country, between 1864 and 1879. But the companies that survived and increased in 
strength were obliged to meet the same conditions. How did they escape? A study 
of the report of this period shows but very little charged off to profit and loss by 
the failing companies ; but a study of their condition at the time of failure shows 
a great gulf between actual and assumed values of assets. In many of these com- 
panies gross frauds had been practiced for years, and a thorough examination would 
have exposed them. In others, loans had been made on insufficient security and with 
evident profit to favored individuals. In some cases loans upon which neither in- 
terest nor taxes had been paid for years were carried on the books at their full 
face value. 

It seems clear from this review that these failures resulted from bad management, 
in the broadest sense of the term. It was extravagant, wasteful, dishonest. It paid 
too much for services rendered ; it did not take proper care of the results obtained. 
The data upon which it proceeded were not deceptive ; no company failed because of 
an excessive death rate, nor (save in a single case) because it was impossible to 
realize a rate of interest equal to that upon which its premiums were cast. The 
assumption which failed was that the loading on the net premiums would equal ex- 
penses and losses on investments. 

In no other business is failure so disastrous as in life insurance; in no other 
is it so unnecessary; in no other is it, therefore, so inexcusable. It is of no use to 
lay the blame of failure upon the law that makes a net valuation the test of solvency, 
because this law existed before most of these companies began business. That was 
one of the conditions of their life, to be prepared for and conformed to, as much 
as any other condition. As it is the province of history to teach us how we may 
avoid the mistakes of our predecessors, I venture to suggest the following as some of 
the safeguards suggested by this study. 

1. The utmost care in making investments — security to be always the paramount! 
consideration. 

2. The necessity of frequent revaluations of securities, and of their rigid adjust- 
ment to changing conditions. 

3. The close study of a company's business upon the principles of the "Gain 
and Loss Exhibit" now required by several Insurance Departments. 

4. The assumption, for the purposes of practical administration, of a higher stand- 
ard of reserve than that by which the company's solvency is tested under the law. 

The first of these suggestions may reduce the rate of interest, but it will save 



89 

the principal ; the second will prevent any serious reduction of assets by insurance 
officials ; the third will locate the fault of the administration, if there be one ; and 
the fourth will preserve a strip of neutral ground between the path the company 
has marked out for itself and the line to which it cannot come near with safety. 

In 1879 the epidemic of failures which had set in nine years before had run its 
course; the patients were nearly all dead, and the business of the remaining companies 
began to improve. 

The period from 1881 to the present time (1898) has been one of uninterrupted 
progress. There has been but one failure of importance and the business has steadily 
grown in public favor. While iit required fourteen years to regain the volume of 
insurance and income reached in 1872 and 1873, it only required seven years more to 
double it. This time the increase came under healthful financial conditions ; it came 
to companies which had been tried as by fire ; and it came to stay. The notable 
features of this period have been a decline in the interest rate, the rise of industrial 
insurance, the liberalizing of the policy contract, and an increase in the expense rate. 

I have said so much by way of criticism that I am sure no one will grudge me 
a paragraph in praise of the benefits which life insurance has conferred during the 
ipast twenty-seven years. The companies have, during that time, received from policy- 
holders over three thousand million dollars; they have paid over one thousand millions 
in death claims, and nearly as much more in endowments, annuities, dividends and 
surrender values. 

Mr. McCall brought the history to the spring of 1898, which was about the be- 
ginning of the terrific race for new business between the "Three Giants" — the Mutual, 

jthe Equitable, and the New York Life. High pressure methods were the rule, and 

jin any of the years from 1898 to 1905 the entire first premium, and more, was used 
to secure the policy. About the close of the year a determined effort would be made 
to write business, and agents would give all or most of their commissions to the 

(prospect as an inducement for him to "sign on the dotted line.'' 

General conditions in life insurance management were criticised by Insurance Com- 
missioners to the extent that the Legislature of New York authorized an investigation 

tin 1905 under the following resolution: 

Whereas, It appears from a preliminary report of the State Superintendent of 
'insurance on the Equitable Life Assurance Society of New York that the interests of 
policy-holders and their beneficiaries in life insurance companies doing business in 
jthe State of New York are not properly safeguarded 'by existing laws, and that a 
'revision of the insurance laws of the State should be undertaken; and 

Whereas, The inquisitorial powers of the Superintendent of Insurance are limited 
I to the examination of the officers and agents of the companies and their books with 
'reference to their business, and with a view to their solvency chiefly, and it is ex- 
pedient that as a basis for legislation the operations of such life insurance companies 
should be investigated as fully and as promptly as may be; 

Resolved, If the Assembly concur, that a joint committee be appointed, consisting 
of three members of the Senate and five members of the General Assembly, which 
committee shall, after adjournment of the extraordinary session, proceed to investigate 
and examine into the business and affairs of life insurance companies doing business 
iin the State of New York, with reference to the investments of said companies, the 
'relation of the officers thereof to such investments, the relation of such companies 
to subsidiary corporations, the government and control of said companies, the con- 
tractual relations of said companies to their policy-holders, the cost of life insurance, 
the expenses of said companies and any other phase of the life insurance business 
deemed by the committee to be proper, for the purpose of drafting and reporting 
to the next session of the Legislature such a revision of the laws regulating and 
I relating to life insurance in this State as said committee may deem proper. 

Further resolved, That the said committee be, and it hereby is authorized and 
empowered to require and enforce the attendance of witnesses, and the production 
of books and papers, to administer oaths and to employ counsel, stenographers, clerks 
and such other employes as may be necessary for the purposes of the investigation. 



90 

And a sum not exceeding fifty thousand dollars ($50,000) is hereby appropriated out 
of any moneys in the treasury, not otherwise appropriated, for the purposes of said 
committee. 

Pursuant to this resolution, three members of the Senate and five members of 
the Assembly were appointed as a committee, with Senator William W. Armstrong 
as chairman of the committee, and Assemblyman Ezra P. Prentice, secretary. The 
other members of the committee were : Senators William J. Tully, Daniel J. Riordan, 
and Assemblymen Robert Lynn Cox, James T. Rodgers, William W. Wemple, John 
McKeown. The committee was assisted by Charles E. Hughes (now of the United 
States Supreme Court) and James McKeen as counsel and Matthew C. Fleming as 
assistant counsel, Miles M. Dawson as consulting actuary and Marvin Scudder as 
financial statistician. 

The committee organized on August 1, 1905, and began its public hearings on 
September 6, 1905, continuing consecutively for fifty-seven sessions, the concluding 
session being held on the 30th of December, 1905. 

To 1905 the general insurance laws in the several States provided, in a general 
way, for the supervision and regulation of life companies, with special reference 
always to the valuation of policies, which requirement had been made since its intro- 
duction in Massachusetts by Elizur Wright in the early fifties. 

After the report of the Armstrong Committee, bills were passed by the Legislatures 
of nearly all of the States, with New York leading, that prescribed policy forms, 
limited expenses for securing business, provided for net surplus over and above 
the legal reserve fund, prohibited the writing of participating and non-participating 
policies by the same company, reduced the interest assumption in valuation of policies 
issued after a designated date, placed restrictions upon preliminary term policies, com- 
pelled the companies to dispose of corporate stocks, to discontinue the control of 
or financial relations with trust companies and brokerage houses and speculative 
syndicates, and extended the powers of Superintendents of Insurance in their examina- 
tions of any statistical reports made by the companies. 

The reports for 1913 are not at hand, but the returns as of December 31, 1912, show : 

Ordinary Business. 

Policies in force 8,159,103 

Insurance in force $15,555,901,171 

Policies written in 1912 1,285,210 

Insurance written in 1912 $ 2,240,434,665 

Premiums received in 1912 472,062,710 

Interest and other income in 1912 183,330,994 

Total receipts in 1912 655,393,704 

Total expenses in 1912 483,348,282 

Total to policy-holders in 1912 367,007,717 

Total assets December, 1912 3,597,650,447 

Total liabilities December, 1912. ; 3,168,194,661 

Required Reserve Accumulation 2,988,642,224 

Surplus 451,453,644 

There were less than fifty life companies in 1905. There were more than one 
hundred and fifty in 1912. The great majority of the new companies are stock cor- 
porations. 

The corporate management of the life companies is by policy-holders' meetings 
in "Mutual Companies;" by stockholders' meetings in "Stock Companies ;" and by 
meetings composed of stockholders and policy-holders in "Mixed Companies. ,, 



91 

It is a pet phrase of fraternal writers and speakers to declare that the life com- 
panies are primarily conducted for the profit of stockholders, while the. conduct of 
fraternal orders is not for profit, but for the benefit of their members. 

It is never well to misrepresent the facts. The Mutual Companies have no stock- 
holders. The "profits" are limited in amount that can be paid to the stockholders 
of the Mixed Companies. The Stock, or Proprietary, Companies most commonly issue 
non-participating policies at comparatively low premium rates, and hence they volun- 
tarily set a limit to the "profits" for their stockholders. 

The real differences between the Life Companies and the Fraternal Beneficiary 
Societies, on the business side, are: 

1. The contract of the Life Company is fixed, while that of the Fraternal Society 
i.? flexible. 

2. The provision for expense of management is greater in the Life Company 
than in the Fraternal Society. 

3. The mortality assumption is higher for the Life Company level premium than 
for the level contribution of the Fraternal Society. 

4. The interest assumption is lower for the Life Company level premium than 
for the level contribution of the Fraternal Society. 

5. The contractual relations between the Life Company and the policy-holders 
are those of a corporation to an individual, while the contractual relations between 
the Fraternal Society and the certificate holders are those of a mutual association 
in cooperative effort. 

6. Because of the character of contractual relations on the basis of a bipartite 
agreement, the policy-holders in the Life Company are not subject to assessment 
even to save the corporate existence. The relations between the Fraternal Society 
and the certificate holders being mutually cooperative, the members occupy the dual 
position of insurer and insured and they are as much obligated to maintain the 
integrity of the insurance contracts as they are privileged to claim the benefits of 
those contracts. The policy-holders are obligated only to pay their stipulated pre- 
miums, and having discharged that obligation they are vested with the right to demand 
the benefit promised. The certificate holders must contribute on extra assessments 
when levied as a condition precedent to vested right in the demand for benefits promised. 

It has always been a mystery to me why the whole argument in the case of 
Fraternal Societies versus Life Companies has been made upon any misstatements 
of the real issues, when the facts would so much better support the contention of 
the Societies. 

OPEN ASSESSMENT ASSOCIATIONS. 

The ill-repute of the Life Companies in the decade 1872-1882 brought forth what 
have been called Open Assessment Associations. The promoters successfully adver- 
tised them on the claim that they were organized as a protest against the high pre- 
miums and extravagant management of the Life Companies, and, at the same time, 
avoided the disadvantages of the lodge system of fraternal orders. They laid claim to 
representative form of government through direct vote in policy-holders' meetings 
held every one, two or three years. This, of course, was as much a farce as are 
similar meetings of Mutual Life Companies, but it served its purpose to delude 
the public. 

I cannot improve upon the history of the Assessment Associations written by 
John A. McCall in 1898, and I quote him : 



92 

Another result of these same causes was that multitudes of men who felt the 
need of life insurance protection sought a substitute for it in cooperative societies. 
I am aware that there is well-founded objection to calling the operations of these 
societies insurance, and it will be stoutly maintained by some that there is but one 
system of real life insurance; nevertheless there may be many systems of post- 
mortem relief, and it is hardly worth while to quarrel about the name so long as 
we apprehend the fact. There is no question that many cooperative societies 
operating between 1870 and 1880, in spite of their imperfect system and because of 
honest management, furnished better protection to their patrons than the level-pre- 
mium companies whose demise we have been considering — although the latter were 
organized upon plans that were unassailable, ran their course of wickedness under the 
aegis of the law, and died in the odor (a very bad odor, to be sure) of regularity. 
While the business of the level-premium companies that failed was but a small per- 
centage of the whole, and there were always sound and well managed companies 
in the field, yet the losses were nevertheless great and widespread, and it was little 
comfort to one who had lost the accumulations of years to be told that he should 
have insured in a better company. A system that furnished (or even promised) 
present protection at low cost, and did not profess to accumulate money for future 
needs, appealed very strongly to men who did not understand theories of insurance, 
but who were angry and sore at heart over losses under a system that professed to 
be perfect. 

There are no official data for ascertaining the number of co-operative and fra- 
ternal societies organized in the seventies, but there are now twenty of each class 
doing business in New York State, which were organized prior to 1880. The first 
Handbook of Assessment Insurance was published in 1886, and contained the sta- 
tistics of 367 societies, 119 of which were organized prior to 1880. Reports were 
first required from such societies by the Pennsylvania Department in 1874, and by 
the Massachusetts and New York Departments in 1882. These societies have under- 
taken to supply post-mortem relief by levying its cost upon members in a variety 
of ways. There have been four plans of assessment insurance, all of which are still 
in use, but which may be stated in the order of their development and of their 
approach to the level-premium plan, as follows: (1) To assess all members alike 
for current cost only; (2) to assess, for current cost only, according to a table 
graduated for age at entrance; (3) to assess according to a table graduated for age 
at entrance, and lay aside an arbitrary sum or proprotion of assessments for a reserve 
fund; (4) to charge a level premium, calculated upon assumptions which give rates 
approximating those of level-premium companies, lay aside a reserve fund on the 
same assumptions, and reserve the right to assess for any definciency. The order 
in which these plans have arisen, as well as their nature and the actual workings 
of each, clearly demonstrate that if an organization would do what the level-premium 
companies guarantee to do, it must do it in their way, and that methods which require 
less from members provide less for members, are likely to miss the one great end 
of all insurance — namely, the certainty of indemnity when the loss occurs. 

The ease with which such societies could be organized and their comparative free- 
dom from official oversight until within a few years led at one time to a speculative 
craze in policies upon the lives of aged and invalid persons in Pennsylvania, and 
fraternal endowment societies have filched from the people of many States amounts 
which rival the losses of the failing level-premium companies. It must be observed 
also that the experience of these societies has not justified their philippics against 
the expense rate of the level-premium companies. The expense rate of the level- 
premium companies doing business in New York State in 1897 was less than twenty- 
three per cent of income, while in the cooperative soeities it was over twenty-eight 
per cent of income. 

The assessment plan of insurance has never been a success, and the numerous 
associations which operated under the three plans first named by Mr. McCall soon 
became involved in financial difficulties, and in the decade 1895-1905 hundreds of 
them failed or were merged into stronger associations or companies. 

Those associations which operated under the fourth plan mentioned by Mr. McCall 
were theoretically the most perfect of life insurance organizations, and they should 



93 

have been able to continue business indefinitely and safely. However, they were 
ultimately forced into the ranks of the regular Life Companies through legislation 
against the Assessment Associations, with which they were classed. 

The plan (numbered "4" by Mr. McCall) of these associations was known as the 
''Flexible Premium System," and in 1896 (two years prior to Mr. McCalFs paper) 
I wrote a brochure, entitled "The Flexible Premium System — A Handbook for Field 
Men." I quote from the "Preface," or "Fore-Word": 

If names were suggested by methods, insurance plans should be grouped under 
four heads : "Assessment," "Natural Premium," "Level Fixed Premium," and "Level 
Flexible Premium" Insurance. 

The development of present insurance plans and methods has been slow, and 
the sharp lines of distinct differences have only been sufficiently apparent from the 
first to give distinguishing names to the two methods of "xA.ssessment" and "Level 
Fixed Premium" Insurance. 

Insurance by "Natural Premiums" was simply assessment insurance with a recog- 
nition of the Mortality Law that the cost of insurance increases with increasing age. 
But there have been few life associations which have adopted and operated under 
the pure "Natural Premium" plan, notwithstanding the fact that hundreds of con- 
cerns take the name of "Natural Premium Companies." Their methods do not justify 
the designation. Their rate cards and literature present premium charges which are 
held to be high enough to provide for a reserve that will render them level through 
the contract period. 

Representation and calculation allege and indicate that these charges, in practical 
operation, will remain level and uniform, unless future cost of insurance exceed past 
experience cost. Only, in the latter event, is it contemplated to increase the rates; 
whereas, insurance by "Natural Premiums" contemplates a yearly increase of charges, 
from the age of entry until death, or the termination of the policy contract. 

Evidently it is a misnomer to call such associations either "Natural Premium" or 
"Assessment" companies. Certainly "Natural Premium," strictly construed, gives no 
indication of their method of operation ; and the only relation to "Assessment" insur- 
ance, is the provision in their contracts to increase rates to cover any increase in the 
cost of insurance. And most of these companies are removed from this mere semblance 
to "Assessment" insurance by making it optional with the policy-holder whether or 
not he pay an increased rate, or have the deficiency charged to his policy and deducted 
from the claim when it matures. 

For those companies which base their rates upon experience cost, and have a 
stipulated level premium, no name so well describes them as that of "Flexible Pre- 
mium" — the "flexibility" being conditioned upon change in insurance cost. 

The 1896 Act of the Massachusetts Legislature, obliging all companies operating 
under the "Assessment Plan," to print "Assessment," in conspicuous letters, in their 
policies and on their literature, rate cards, etc., is a sure indication of future legisla- 
tion which will force more definite distinction in the representations of insurance 
methods. 

"Level Flexible Premium" insurance differs materially from any other method, 
and a general designation, which aptly applies to "Level Fixed Premium," "Assess- 
ment," or "Natural Premium" insurance, does not describe it. 

Under present legislative conditions "Flexible Premium" companies must qualify 
under laws regulating "Assessment" insurance. "Level Fixed Premium Companies," 
seeing that "Level Flexible Premium" organizations are writing level premium in- 
surance, under advantages secured to them through qualification under assessment 
laws, have inaugurated a movement to discredit assessment insurance in any form, 
even to that of the Flexible Premium. The Massachusetts Act, of 1896, smacks of 
paternalism in the nature of protection to the level fixed premium companies, and 
bears such evidences of favoritism as will not long be tolerated by the people. The 
discussion, however, which naturally comes from such attempted class legislation, will 
probably result in a better general understanding of insurance methods and plans. 

The Assessment Associations which operated under the "Flexible Premium Sys- 
tem" could not secure legislation that would distinguish them from the ordinary 
"Open Assessment Associations," and they could not continue under the general 



94 

laws for the supervision and regulation of Assessment Associations and consequently 
they qualified under the legal reserve laws for regular "old line" companies. 

The "Safety Clause" in their contracts corresponded to the "right to levy extra 
assessments" reserved in their certificates by the Fraternal Beneficiary Societies that 
now base their contribution rates upon some standard table of mortality with an 
assumed interest earning an accumulation required to maintain rates level and uni- 
form. This plan of the Fraternal Societies is theoretically and practically sound and 
I could not support it with a stronger statement than I made in 1896 in reference to 
the "Flexible Premium System." I am still enamored of the plan and I quote from 
the writing of eighteen years ago, that it may be applied to the flexible premium sys- 
tem of the level-rate Fraternal Beneficiary Societies of today : 

Careful consideration and study of existing conditions in life insurance, as above 
set forth, some twenty years ago resulted in the formulation of the system known 
as the FLEXIBLE PREMIUM PLAN of LIFE INSURANCE, which 

EQUALIZES THE COST, 

CORRECTS THE ABUSES, 

AVOIDS THE DANGERS, and 

MAINTAINS THE SAFETY of INSURANCE to an UNEQUALLED DEGREE. 

The calculations of the actuaries and the actual experience of insurance companies 
and societies served as a guide in fixing the premium rates, as well as the policy 
conditions. The result is that the rates are those which experience has shown to be 
sufficient in the past, and which will remain uniform and level so long as the past 
average of insurance cost is maintained. 

The cost of insurance is equalized by requiring payments in excess of insurance 
needs during the earlier years, thus creating a reserve, as fully explained in illustrating 
the operation of level premium insurance. The flexible premium in nowise differs 
from the level premium in this respect, but under the most improved policy contracts, 
the company binds itself to keep each policy's proportion of the reserve fund equal to, 
or greater than, the difference between the present worth of the future net premiums 
and the present worth of the amount insured, thus enabling these companies to equalize 
and keep level the premium rates, in identically the same way as done by the old 
line or level-premium companies — with the marked advantage, however, in the privi- 
lege, under the flexible premium plan, of having the entire reserve fund always sub- 
ject to the payment of all losses, instead of having it subject only to each policy's 
proportionate share. 

The abuses arising from waste of funds, as heretofore instanced and emphasized, 
is corrected under the flexible premium system by limitation, in the policy contract, 
of expense charges. Thus the surplus, whether from lapse, surrender, interest earn- 
ings, or other sources, is of the general reserve fund, and must be exclusively used 
for the benefit of policy-holders. 

The dangers possible from a reduction of rates to the cost of insurance, as in- 
dicated by past experience, are avoided under the flexible premium system by the 
simple and effective provision, which enables the company to collect an increased pre- 
mium sufficient to meet the increased cost. In other words, the premium rate is not 
fixed and unchangeable as with the level premium rates, but they are left flexible so 
as to cover any change that may come into the cost of insurance. 

It is utterly impossible to positively anticipate either a future death-rate or the 
future value of investments. 

The greatest care may be exercised in making conservative mortality estimates 
as well as endeavoring to invest only in good and safe securities, yet a "Black Plague" 
may change the death-rate, or a "Black Friday" knock the bottom out of values. 

Safety is the keystone of the arch upon which rests the whole superstructure of 
life insurance. 

Safety is the foundation principle of life insurance, and safety must be assured 
beyond peradventure. 

This is accomplished under FLEXIBLE PREMIUM INSURANCE beyond any 
sort of question. 

So long as the death-rate remains the same, and financial conditions do not affect 
the value of securities, premium rates, based upon experience cost, will remain the 
same. Should conditions arise whereby the cost of insurance is increased, the policy- 
holders must justly and rightly contribute their share to the payment of this increased 
cost, and the company reserves the right to require it of them. 



95 

While SAFETY is thus assured, cheapness is secured and waste and insolvency 
made impossible. Waste is not possible because of the limitation to expense of man- 
agement; insolvency is not possible because the income can be increased as the 
exigencies of insurance cost may require. 

Hence, it follows that 

The Flexible Premium System 

Combines all of the desirable features and basic principles to make 

The Perfect System of Ltfe Insurance. 

It is especially adapted to the combination of those most desirable features, 
Cheapness and Safety. 

I give the following statistics, as of December 31, 1912: 

Number of Assessment Associations 135 

Number of Certificates • 484,228 

Insurance in force $428,344,892 

Amount written in 1912 100,639,042 

Total income in 1912 11,184,473 

Total disbursements in 1912 10,017,766 

Total admitted assets 10,674,094 

Total liabilities • 2,71 1,601 

Of the 135 associations, which are given in the Spectator's Year Book none remain 
of the large ones existing in the decade 1891-1901. The Mutual Reserve Fund (which 
once expended $30,000 for a private yacht and entertainment of Insurance Commis- 
sioners in convention on the St. Lawrence), Bay State, Massachusetts Benefit, North- 
western Life, Old Wayne Mutual and hundreds of others, which carried millions of 
insurance in 1891-1901, are gone out of existence. 

Many of the 135 have been organized since 1901, and most of these are doing 
business in the South amongst the negroes of that section. Those in existence Decem- 
ber 31, 1912, which commenced business prior to 1902, are largely confined to the 
members of some order, profession or occupation. A list of them no doubt will be 
of interest : 

Year 
Organized. Name of Organization. 

1886 Albany Women Teachers' Relief Association, Albany, N. Y. 

1889 American Temperance Life Insurance Association, New York City. 

1901 American Mutual Benefit Society, Baltimore, Md. 

1884 Catholic Knights of Illinois, State Council, Belleville, 111. 
1882 Columbian Protective Association, Binghamton, N. Y. 

1880 Commercial Travelers' Life and Accident Ass'n of Cleveland, Cleveland, Ohio. 

1881 Commercial Travelers' Mutual Benefit Association, Toronto, Can. 
1849 Cremieux Benevolent Society, New York City. 

1885 DeWitt Clinton Ready Relief Association, Brooklyn, N. Y. 

1886 Empire State Degree of Honor, Supreme Lodge, Stockton, N. Y. 
1869 Expressmen's Mutual Benefit Association, New York City, N. Y. 
1895 Globe Mutual Life Insurance Association, Chicago, 111. 

1878 Gold and Stock Life Insurance Association, New York, N. Y. 
1884 Golden Eagle Association, Brooklyn, N. Y. 

1884 Home Friendly Society, Baltimore, Md. 

1897 Illinois Bankers Life Association, Monmouth, 111. 

1892 Industrial Life and Health Insurance Company, Atlanta, Ga. 

1872 Insurance Clerks' Mutual Benefit Association, New York, N. Y. 

1884 Jewelers Safety Fund Society, New York City. 

1877 Knights Templar and Mas. Mutual Aid Association, Cincinnati, Ohio. 

1879 Lutheran Mutual Aid Society, Waverly Iowa. 
1872 Masonic Life Association, Buffalo, N. Y. 



96 

1894 Merchants' Life Association, Burlington, la. 

1879 Minnesota Scandinavian Relief Association, Red Wing, Minn. 

1893 Mutual Aid Society of Lutherans, Toledo, Ohio. 

1887 Mutual Benefit Association of Fifth Street Baptist Church, Troy, N. Y. 

1876 Mutual Benefit Association of Suffolk County, Riverhead, N. Y. 
1896 Mutual Life Asssociation of Iowa, Red Oak, la. 

1899 National Benefit Association, Washington, D. C. 

1900 National Life Association, Des Moines, la. 

1898 Nebraska Mutual Life Insurance Co., Hastings, Neb. 

1868 New York Physicians' Mutual Aid Association, New York City. 

1883 New York Safety Reserve Fund, Syracuse, N. Y. 

1899 North Carolina Mutual and Provident Association, Durham, N. C. 
1875 Northwestern Traveling Men's Association, of Chicago, Chicago, 111. 

1895 Postal Employes' Mutual Aid Association, New York City, N. Y. 
1886 Protective Life Assurance Society, Buffalo, N. Y. 

1883 Provident Association of Newtown, L. I., Maspeth, L. I., N. Y. 
1874 Railway Mail Mutual Benefit Association, Chicago, 111. 

1894 Scandinavian Mutual Aid, Minden, Neb. 

1884 Seventh Regiment Vet. & Act. League, New York City, N. Y. 
1882 St. Lawrence Life Association, New York. 

1877 Stafford Benefit Association, Stafford, N. Y. 

1898 Surety Fund Life Company, Minneapolis, Minn. 

1899 Swedish Baptist Mutual Aid Association of America, Chicago, 111. 

1878 Swedish Methodist Aid Association, Chicago, 111. 

1885 Swedish Mutual Aid Society "Scandia" in N. Y., New York City. 
1867 Telegraphers' Mutual Benefit Association, New York City, N. Y. 
1882 Toledo Traveling Men's Association, Toledo, Ohio. 

1898 Union Mutual Aid Association, Mobile, Ala. 

1878 Western Commercial Travelers, St. Louis, Mo. 

1884 Western Life Indemnity, Chicago, 111. 

1886 Western Masons' Mutual Life Association, Los Angeles, Cal. 

1886 Workingmen's Cooperative Association of the U. I. L. of N. Y., New York City 

1878 Young Men's Mutual Life Association, Cincinnati, Ohio. 



INDUSTRIAL INSURANCE COMPANIES. 

Industrial insurance, although in operation in England since T854, was first intro- 
duced into this country in 1873. In 1880 three companies were issuing this form of 
indemnity, and the amount in force at the end of the year was somewhat over 
$13,000,000. On December 31, 19T2, the number of policies in force was nearly 
27,000,000, insuring nearly four thousand million dollars. The amount insured under 
industrial policies now exceeds the total life insurance in force in this country prior 
to 1880. 

Its salient features have been (1) weekly collections of premiums at the homes 
of the insured; (2) the insurance of the whole family; (3) uniform rates for males 
and females; (4) limitation of the amount of insurance upon lives under ten years of 
age to burial fund proportions. 

Premiums are five cents per week and upward ; insurance $15 and upward. The 
average premium is about ten cents per week, and the average insurance about $125. 

The industrial companies have had to overcome anew the prejudice which was 
formerly directed against the companies insuring for larger amounts. Professional 
philanthopists have again and again conjured up the spectre of children starved and 
murdered for the sake of an insurance that would scarcely afford decent burial. Over 
against the spectre the industrial companies have once and again set the facts, showing 




97 

care in the selection of risks and in the payment of claims, and the further fact that 
the mortality among insured infants is lower than the average infantile mortality. 
Over agajnst accusations of placing burdens upon poverty the companies have shown 
that an increase in industrial insurance has gone hand in hand with an increase in sav- 
ings bank deposits. 

As bearing upon the history of Life Insurance, several points must be noted : 

I — The industrial companies have immensely broadened the field of Life Insur- 
ance. They have not only extended its benefits to a large number of persons insuring 
for small amounts, but they have included classes heretofore considered uninsurable. 
They have demonstrated that it is possible to ascertain and cover by an adequate 
premium the risk of death upon practically every healthy human being who is not 
living in flagrant violation of moral and hygienic laws. The companies have been 
obliged to contend with a death rate among adults nearly twice as great as that which 
has prevailed among the companies doing an ordinary life insurance business, and to 
ascertain by actual experience the death rate among children ; but they have within 
comparatively few years obtained the facts, and reduced them to a science, upon which 
they have upreared the stately structure of Industrial Insurance. The number of 
industrial policies now in force is over three times as great as the number of ordinary 
policies ; and, while the amounts are small, who shall say that the service done each 
family is not as great in the one case as in the other? 

2 — Again, the industrial companies have shown that it is worth while to do small 
things in order to accomplish great things — that the business will bear whatever expense 
is necessary to do it in the best way. The companies have learned that the industrial 
classes will not save money and pay for insurance by quarterly or monthly premiums ; 
that they will not take insurance that involves remittances by mail or by periodical 
payments at an office ; but that they will cheerfully pay the cost of it, if it is brought 
to their homes and sold on weekly installments. 

3 — If we look closely we shall perceive that industrial insurance — so far as it 
applies to infants — has introduced a new principle. Every other kind of insurance is 
indemnity for value lost; infantile insurance is indemnity for expense incurred. The 
infant life has no pecuniary value; it does not produce — it consumes; 'but, if it ceases, 
an expense must be incurred for its burial. The expense of its maintenance, if it lives, 
can be provided for by the earnings of parents, because this expense — like these 
earnings — will be so distributed as to require but little outlay each week. So the 
expense, involving the instant outlay of a week's wages or more, can be met in the 
same way by industrial insurance. It is not exactly insurance upon life, but, in the 
language of the charters and of the law, "insurance pertaining to life." 

CHILD INSURANCE. 
In 1907 the National Fraternal Congress instructed the Committee on Statistics to 
report concerning "Child Insurance," and I prepared for the Committee a statement 
which required several months of labor and research, involving inquiries of Industrial 
Companies in the United States and Friendly Societies and Industrial Companies of 
Great Britain in regard to practical operation. I received several thousand pages of 
printed and typewritten matter and condensed the information into a typewritten state- 
ment of about 80 pages for the Committee. 

When no advantage was taken by the Congress of this mass of data, I made an 
arrangement with Metropolitan Life, of New York, whereby that company would re- 
insure all child Insurance Business obtained by Fraternal Beneficiary Societies. I pre- 
pared a policy form which was acceptable to the Metropolitan Actuaries and was 
approved by leaders amongst fraternal society officials — and the plan for reinsurance 
was likewise approved. 

The members and deputies of the Societies were to make or secure the applications 
and send them to the head office of the Society, under the same regulations for other 
applications; and the collectors for the Society were to make collections (monthly 



98 

instead of weekly) as other collections were made. There were no dealings between 
members or deputies and the Industrial Company. The latter merely assumed the 
insurance risk and received periodical remittances from the Society direct. 

An agreement was entered into with several Societies to carry out the plan, but 
the general sentiment of the officials of Fraternal Societies was antagonistic, and, 
personally, I was severely criticised for proposing "an unholy alliance with the arch 
enemy of the Fraternal System." The adverse comment caused the officials to with- 
draw from the agreement, and the plan of reinsurance came to naught. 

I had become accustomed long before to criticism, and to having my motives mis- 
understood and misconstrued and unjustly condemned, and I pursued the even tenor 
of my way, depending upon time for my justification. 

One of the gravest and most serious mistakes which has been made — continuously 
and persistently made from the very beginning — by the officials of Fraternal Beneficiary 
Societies has been to assume an eternal and inevitable conflict between the Societies 
and the Life Companies. 

The Societies are not organized for the efficient handling of certain forms of insur- 
ance, and it would be much better that they confined their operation to the original 
idea of protection against dependency of members and their beneficiaries, and thereby 
retain statutory privileges and exemptions. 

Correct and commendable relations between the Societies and the Life Companies 
would permit of "reinsuring surplus lines" of the former by the latter on the like 
amicable and satisfactory terms as in practice now existing between Life Companies. 

The Fraternal Beneficiary Societies have the organized machinery for securing 
business at much less expense than can be done by the Ordinary or Industrial Life 
Companies. They are especially well equipped for securing the business for "Child 
Insurance" and "Group Insurance," though handicapped in several ways in success- 
fully taking care of such business, even when permitted to do so by State Legislation. 

I appreciated the difficulties to be overcome by Fraternal Orders before they could 
grant Child Insurance, and believed I was doing something for their good when I 
arranged the reinsurance plan. 

The Industrial Companies cannot successfully carry on their business outside of 
the population centers. To make weekly collections a collector must be able to see 
several scores of persons in a day, which is impossible except in thickly populated 
districts. 

By means of the lodge system the collectors for Fraternal Beneficiary Societies could 
attend to the payments by members for insurance on their children, and thus bring 
this beneficent protection to the homes of hundreds of thousands in the country dis- 
tricts and towns and small cities that cannot be reached by the Industrial Companies. 
Even in the large cities, the Fraternal Beneficiary Societies have a membership whose 
homes are not entered by these Companies. There would be very little competition 
between the Societies and Companies in the conduct of "Child" or "Juvenile" Insur- 
ance, and there is no ground other than that of prejudice for objection to cooperation 
between the Societies and the Companies. 

At any rate, between three and four millions of children go uninsured through 
the failure of the Fraternal Orders to engage in it, or otherwise encourage it. The 
Industrial Companies have about ten millions of children of the twenty-seven millions 
insured December 31, 1912. 

As to the "Group" Insurance, there is criticism of the Life Companies for under- 
taking it, and yet the Fraternal Managers, with every facility for promoting it, stand 



99 

by and neglect their opportunities. This class of insurance would be fittingly appro- 
priate for reinsurance relations with the Life Companies. 

The accumulated encumbrances of years have narrowed the scope of operation for 
Fraternal Beneficiary Societies, and before the officials can come to an agreement con- 
cerning Group Insurance, I fear the Life Companies will have the lion's share. 

Returning to the subject of "Juvenile Insurance," I conclude with reproducing the 
report of the Committee on Statistics and Good of the Orders to the National Fra- 
ternal Congress, in session at Put-in-Bay in 1908: 

Put-in-Bay, Lake Erie, August 19, 1908. 
Tq the Officers and Members of the National Fraternal Congress : 

Your Committee on Statistics and Good of the Orders begs leave to submit its 
report on the matter of Industrial Insurance, in accordance with the terms of the 
resolution offered by Mr. Gerard at the meeting of the Congress last year, which is 
as follows : 

"Whereas, There is a demand among the membership of Fraternal Beneficial Socie- 
ties for some form of industrial protection for minor members of their families ; 

"Therefore, Be it Resolved, That this question be referred to the Committee on 
Statistics and Good of the Orders, to be hereafter appointed, to investigate the legal 
requirements necessary to amend the present laws in the various States, and to submit 
plans and rates necessary to provide for Industrial Insurance, to be confined exclu- 
sively to the families oi members of Fraternal Beneficial Societies, at next session of 
this Congress. ,, 

It will be observed that the resolution, in substance, asks that we ascertain whether 
such work might be advantageously undertaken by the various orders here represented, 
and, if so, whether the laws of the various States would permit us to do so. 

Soon after the close of the last meeting of the Congress we addressed a letter to 
the president of each order here affiliated, requesting his or her views on this subject, 
and also requesting them to make inquiries as to the probable demand for such benefit 
among their "field workers" and members. We regret to say that but few of those 
thus written gave the matter such attention as we desired, hence we are not in a 
position at this time to indicate what the demand for such benefits would be, although 
those who did seem to give it attention, reported quite a large proportion of their 
members as being patrons of the Commercial Industrial Companies, and as in full 
sympathy with the establishment of such departments in connection with our other 
work. We then concluded to give the matter a careful examination and learn what 
we could of the subject generally. To this end we sought the advice of Mr. Abb 
Landis, who is well known to all, as to the best sources of such information, and were 
very agreeably surprised and much pleased to learn that he would glady help us in 
the matter of gathering the data needed, and when he coupled with this offer a willing- 
ness to do this without making a charge for his service, we gladly took advantage of 
his generosity. 

Mr. Landis has furnished us what appears to be a very comprehensive and ex- 
haustive paper or report on "Industrial Insurance," covering about sixty pages of 
typewritten matter, in which he deals with every element that we should understand 
pertaining to the history, purpose and plan, as well as the cost and experience of the 
companies doing that line of work here and abroad. Your Committee would like to 
have taken the time to present his views on the subject to this Congress, but came to 
the conclusion that it would be best to submit with our report this report of Mr. 
Landis, which the Congress may have printed if it wishes to do so. Regardless of 
the action of the Congress in this relation, your Committee wishes to give Mr. Landis 
due credit for his advice and for the generous contribution he made to our fund of 
information, upon which we shall make frequent and liberal drafts in what we shall 
have to offer. 

The business of industrial insurance, as we know it now, is not an American 
product ; it is an imported article coming here from England. It was first introduced in 
its present form by the Friendly Societies of Great Britain. Its main purpose is to 
secure a decent funeral and burial for the person insured, and is largely used by parents 



100 

for the benefit of their minor children, although all the commercial companies insure 
adults as well. 

The Prudential Company of Newark, N. J., was the first to establish this business 
in America. It was authorized in 1873 by special act of the New Jersey legislature 
as "The Widows' and Orphans' Friendly Society." In 1875 its name was changed 
to the "Prudential Friendly Society," and later to the "Prudential Insurance Com- 
pany of America." The capital was originally $25,000 ; its capital is now and has been 
since 1893, $2,000,000. Of this amount only $91,000 was paid in in cash; the balance 
represents profits capitalized. The company has been a liberal dividend payer all these 
years. In short, the business has been very profitable and this company is a fair example 
of all the other established companies doing this line of business. The Metropolitan is 
the largest of such companies, and that you may have a fair idea of the volume of 
such business in this country, it may be said that it had over 9,620,000 policies in force 
at the close of 1907. Its income that year was more than $73,000,000. The new indus- 
trial business written by it and paid for was over $254,000,000 and the number of claims 
paid were 137,270. Its net gain in policies for the year was over 600,000. In other 
words, this line of insurance work has become very popular in recent years, and 
through the thorough organization of the large companies it has become very profitable. 
And yet it cannot be said there was any demand for such a business. It took the 
Metropolitan company over five years to reach the point where the business took 
care of itself. It was necessary for that company to import from Great Britain a force 
of two thousand experienced industrial insurance workers to establish their business 
in all its departments. The demand had to be created, just as is the case today in 
any department of insurance work, .excepting, in a limited way, only fire insurance. 
The business is now well established, but it is all, practically, in the hands of the com- 
mercial companies. It has been diverted from the Friendly Societies to the com- 
panies for profit. Everybody knows that it is grossly expensive as compared with 
even ordinary life insurance — made so by the system and plan of operation. The cost 
of securing the business in the first place is necessarily great in proportion to the 
premiums paid by the insured, since the great bulk of the premiums are not more 
than ten cents per week, and in most cases of infants or children under ten years of 
age, only five cents. The collections are made weekly at the home of the insured, by 
paid collectors, who are also solicitors, and the work of taking care of the business 
at the home office is correspondingly greater than the ordinary life insurance business. 
President Hegeman of the Metropolitan Company says that the work of securing 
and caring for this business, as compared with ordinary life insurance, is as eighteen 
to one, while the expense is as two and one-fourth to one. 

In the matter of expense, the Prudential is about the same as the others. For 
1907 their experience was as follows : 

Ordinary Life Department : 18.05 per cent. 

Industrial Department 37.27 per cent. 






One of the remarkable facts connected 
relation between population and industrial 
following table compiled by Mr. Landis : 



with the development of this work is the 
policies in force, as will appear from the 



Ages. 



I 


to 


4 


inclusive 


I 


to 


9 


inclusive 


I 


to 


14 


inclusive 


I 


to 


IQ 


inclusive 


5 


to 


17 


inclusive 


20 


to 


29 


inclusive 


30 


to 


39 


inclusive 


40 


to 


49 


inclusive 


50 


to 


59 


inclusive 


60 


to 


69 


inclusive 


1 


to 


69 


inclusive 



Percentage 

of 
Population. 

957 
21.28 

31.94 
41.91 
28.42 
18.20 
13.88 
io.t6 
8.80 
4.08 
95-12 



Percentage of 

Policies in 
Force, 1904. 

9-57 
22.47 
34-66 
45.35 
31.65 
17.68 
12.83 

906 

8.06 

4.86 
98.74 



101 

Some may be under the impression that such insurance on the lives of children 
tends to crime or neglect, but our investigation of this matter leads us to the conclu- 
sion that such impressions are wholly erroneous and unfounded ; that there is no 
evidence to establish this fact that does not apply with equal force to adult insurance. 

The people who generally patronize these companies are poor and whose means 
seem to impel them to buy this form of protection because they can get it for a few 
cents per week, without apparently realizing that in proportion to the benefits to be 
secured they are paying an exorbitant price. This is not the fault of the companies 
because under their system it is doubted if it could be furnished at very much less. 

Now, let us see what the companies give for the weekly premium of five and ten 
cents, and let it be remembered that a weekly premium of five cents means $2.60 per 
year, while a ten-cent weekly premium means $5.20 per year. 



INFANTILE TABLE 



Weekly Premium, 5 cents. 
Benefit Payable if Policy has 


Premiums Cease at Age 75. 
. Age Next Birthday When Policy 
is Issued 




2 


3 


4 


5 


6 


7 


8 


9 


Less than 6 months 


$12.50 

25.00 

34.00 

40.00 

48.00 

58.00 

70.00 

110.00 

145.00 

173.00 


$17.00 

34.00 

40.00 

48.00 

58.00 

70.00 

105.00 

140.00 

169.00 


$20.00 

40.00 

48.00 

58.00 

70.00 

100.00 

135.00 

165.00 


$24.00 
48.00 
58.00 
70.00 
95.00 
130.00 
160.00 


$29.00 

58.00 

70.00 

90.00 

125.00 

155.00 


$35.00 

70.00 

85.00 

120.00 

150.00 


$40.00 

80.00 

115.00 

145.00 


$55.00 


Over 6 months, under 1 year 

One year 


110.00 
140.00 


Two vears 




Three years 




Four years 






Five years 








Six years 










Seven years 












Eight vears 































Xo infantile policies will be issued with a weekly premium of ten cents. 



INFANTILE TABLE. 



Weekly Premium, 3 cents. 

Benefit Payable if Policy has 

been in force for 




Premiums Cease at Age 75. 

Age Next Birthday When Policy 

is Issued 




2 


3 


4 


5 


6 


7 


8 


9 


Less than 6 months 


$ 7.00 
15.00 
20.00 
24.00 
29.00 
35.00 
42.00 
66.00 
87.00 

104.00 


$10.00 
20.00 
24.00 
29.00 
35.00 
42.00 
63.00 
84.00 

101.00 


$13.00 
24.00 
29.00 
35.00 
42.00 
60.00 
81.00 
99.00 


$14.00 
29.00 
35.00 
42.00 
57.00 
78.00 
96.00 


$17.00 
35.00 
42.00 
54.00 
75.00 
93.00 


$21.00 
42.00 
51.00 
72.00 
90.00 


$24.00 
48.00 
69.00 
87.00 


$33.00 


Over 6 months, under 1 year 

One year 


66.00 
84.00 


Two years 




Three years 




Four years . . 






Five years . . 








Six years . . . 










Seven years 












Eight years . 































102 

When the person to be insured is less than ten years of age next birthday, the 
amount of benefit payable depends upon the length of time the policy has been in force. 
Thus, if a child is five years of age next birthday when the policy is issued and the 
policy remains in force three years, the insurance for a weekly premium of five cents 
will be $95. After the policy has been in force four years the insurance will be $130, 
and after it has been in force five years it will provide for a payment of $160 at death. 

By this time, however, the child will be ten years of age next birthday, and there- 
after the amount of insurance will remain at $160. 

In no case will any policy be written for a greater amount of insurance than set 
forth in the following table, nor will any policy be written which together with any 
other insurance then in force, in this or any other company, would make the total 
amount of insurance in force exceed the amounts stated in this table. 



Age 


Limit 


Age 


Limit 


Age 


Limit 


Age 


Limit 


next 


of 


next 


of 


next 


of 


next 


of 


Birthday. 


Insurance. 


Birthday. 


Insurance. 


Birthday. 


Insurance. 


Birthday. 


Insurance. 


2 


$30.00 


7 


$140.00 


12 


$380.00 


17 


$612.00 


3 


34.00 


8 


168.00 


13 


460.00 


18 


700.00 


4 


40.00 


9 


200.00 


14 


520.00 


19 


784.00 


5 


48.00 


10 


240.00 


15 


520.00 


20 


855.00 


6 


58.00 


11 


300.00 


16 


520.00 


21 


930.00 



It is understood that the average amount of protection in force in the Industrial 
companies in 1904 was $32.56 on all ages under ten. Under age 15 it was $48.90. At 
age 2 the average was $13.33, at age 3 it was $19.10, at age 4 it was $23.46, and at age 
5 it was $27.70. 

From this it appears that the rate of premium is very high, during these years, 
$2.60 for an average of only $32.56 under ten years and $48.90 under fifteen years. 

In this connection it may be said that the Insurance Department of the State of 
New York has made a thorough investigation of the mortality experience of the Metro- 
politan Company, from which it has a mortality table that is now recognized as a 
standard for such business, and were these organizations to undertake the work this 
table could be made the standard so that there would be no groping in the dark as to 
what experience might reasonably be expected. Mr. Landis has prepared for us and 
we append herewith a table showing the amount of protection that $1.00 per year will 
buy contributed monthly on term to age 21, Standard Industrial Mortality Table and 
four per cent interest. 

Age next 

Birthday. Col. 1 Col. 2. Coll 3. 

2 $109.86 $93.38 $87.89 

3 144.60 122.91 115.68 

* 17932 152.42 14346 

5 203.81 173.24 163.05 

6 222.46 189.09 177.97 

7 235.70 200.35 188.56 

8 245.25 208.46 196.20 

9 250.12 212.60 200.10 

J o 250.06 212.55 200.05 

11 245.26 208.47 196.21 

12 236.64 201.14 189.31 

J 3 225.38 191.57 180.30 

T 4 212.81 180.89 170.25 

T £ 109.72 169.76 159.78 

10 187.04 158.98 149.63 

$3,148.05 $2,675.81 $2,518.44 



103 

Col. i. Amount of protection that $1.00 per year will buy contributed monthly 
on term Age 21, with no deduction for expenses. 

Col. 2. Amount of protection that $1.00 per year will buy contributed monthly with 
15 per cent used for expenses (85c per year net). 

Col. 3. Amount of protection that $1.00 per year will buy contributed monthly with 
20 per cent used for expenses (80c per year net). 

It will be seen from what has been said about cost that with a 20 per cent loading 
for expenses, from 2 1-2 to 5 times as much protection could be furnished for $1.00 as 
is now obtainable. And why? Let us answer, largely because we could minimize the 
cost of securing and retaining the business. How could we do this? Because we have 
the machinery now organized, and by limiting the benefits to small amounts as above 
indicated is done by the commercial companies in this country, and this is equally true 
of the foreign companies, the annual premium would be so small that it could and 
should be paid in one sum, thus at once practically doing away with two of the prin- 
cipal causes of the great expense incident to the business — collecting and office work. 
Then again, this great reduction in annual cost would be a great inducement to our 
members who want such protection to secure it in the society where they hold their 
membership, and should materially reduce the cost of securing the business. In short, 
the only reason for establishing such departments would be the advantage that would 
accrue to our members and to our Orders. It would increase the interest of the mem- 
ber in the Order, because of the financial saving and the convenience of handling it. 
It would in a way interest the children in the Order, and as they reached the age when 
they could become members they would be going in the right direction. 

From the foregoing our Committee concludes that this work can be advantageously 
and economically done by these associations. 

That the benefits should be limited to small sums — not over $40 — on the life of any 
child between one year and five years of age, and not to exceed $150 in any case. 

That the mortality table adopted by the State of New York, above referred to, 
should be made the standard. 

That it would be advisable to require the premiums or rates to be paid annually. 

That no one but members of these Orders should be allowed to take advantage of 
this provision, and that in no case should any one but the parent of the child be 
allowed to secure such benefits, or the guardian of the child when death of the parent 
occurs after the issuance of the certificate in such cases. 

That in all cases the protection thus secured should end on the child becoming 
twenty-one vears of age, and that the protection thus afforded be called "INFANTILE 
PROTECTION." 

Before this work can be undertaken by these Orders two things are necessary : 

First. Legislation must be secured in the different States authorizing it, and to 
that end provision should be made in the new Uniform Bill, now under consideration. 

Second. Those Orders that want to establish such branches or departments must 
amend their laws accordingly. Fraternally submitted, 

D. P. Markey, Chairman. 
W. E. Robinson, 
F. Fairman, 
John T. Yates, 

Committee. 

Mr. Markey also reads section the Committee would suggest be made a part of the 
Uniform Bill, as follows: 

"Section Any association authorized to do business under this Act may issue 

certificates upon the lives of the children of its members who are not less than one 
year or more than eighteen years of age. The amount of protection to be thus fur- 
nished shall in no case exceed the sum of forty dollars on the life of any child between 
the ages of one year and five years, and $100 on the life of any child between the 
ages of five years and ten years, and $150 on the life of any child between the ages 
of ten years and eighteen years. All such certificates shall be issued for a term of 
years ending with the attainment of the age of twenty-one by the child upon whose 
life the certificate is issued. No benefit thus provided shall be payable to any other 
person than the parent of the child, except in cases where subsequent to the issuance 



104 

of the certificate the parent of the child in whose favor the certificate is issued shall 
have died, in which event the certificate may be payable to the guardian of the child. 

"All contributions necessary to provide such protection shall be based upon the 
standard industrial mortality table adopted by the State of New York, and interest at 
the rate of 3 1-2 per cent per annum." 

Mr. Markey: Mr. Landis wishes me to make this statement, which is probably 
just in this connection: The actuaries of the Prudential, Metropolitan and John Han- 
cock supplied Mr. Landis with many details and much information, they being informed 
that the same would be presented to the National Fraternal Congress, in which cir- 
cumstances your committee desire to acknowledge obligation and express appreciation 
to the officers of these life companies. 

Mr. Markey: I move that the report of the committee be accepted and placed on 
file. 

Motion seconded and carried. 



A GENERAL REVIEW. 

Much space has been given to quoting others, and it now may be pertinent to 
indulge some personal observations in the way of a general review. 

Organization for mutual assistance is of great antiquity and wide distribution. 
Societies of this kind have not always been as sharply differentiated as they are to-day. 
In common with other institutions they have emerged from a comparatively indefinite 
similarity to a comparatively definite heterogeneity, and have doubtless yet to undergo 
further development. 

The first systematic effort at mutual cooperation along altruistic lines was in 
the formation of the great trade guilds of the Midde Ages. As the guilds degenerated 
and gradually outlived their usefulness, the need of substitute organizations became 
apparent. To the recognition of this need we may trace the rise of the Friendly 
Societies of Great Britain. Of these, it will suffice to consider a typical specimen, 
for which purpose I have selected the largest and strongest, the Manchester Unity, 
I. O. O. F. 

This great body, with a present membership of over a million, is composed of and 
governed by the laboring classes. Local lodges exist in all parts of the country and 
manage their own affairs in a thoroughly democratic manner. They are as inde- 
pendent as the New England town, being, like the latter, subordinate to a central 
body of strictly limited authority, to which they send representatives. In the local 
lodge itself one member is as good as another and discussion is perfectly free. The 
officers of the central governing body are elected annually, with the exception of the 
Secretary, whose tenure is permanent. 

The founders of the Unity failed to appreciate the nature or magnitude of the 
financial problems involved in their undertaking. Although the plan of the society 
contemplated the payment of definite sickness and funeral benefits, no attempt was 
made to calculate adequate rates of contribution. Aside from the fact that such a 
calculation would have been impracticable for lack of a sufficient volume of reliable 
data, its importance was not recognized. 

There existed in Great Britain the same feeling that we find so prevalent in our 
own country — namely, that "Fraternity" could be depended upon to overcome all the 
evil results of vicious business habits. That Fraternity is capable of accomplishing 
much can be doubted by no careful observer ; but the tendency to regard it as a 
panacea is sure, soon or late, to lead to disaster. This the Unity learned in time by 
the teachings of bitter experience. 

Organized in the year 1812, the Unity grew and flourished for several years, be- 



105 

cause its rates sufficed while the members were all young and mostly in good health. 
In fact, many of the lodges became burdened with accumulated funds, of which they 
proceeded to relieve themselves by exploiting the social virtues. They little realized 
that these very accumulations formed their only safeguard for the future when, on 
account of the increasing age and infirmity of their members, the claims should be- 
come too heavy to be easily satisfied from the proceeds of current collections. 

After some thirty years of this loose, improvident operation, it became abundantly 
manifest to some of the more thoughtful members that the Unity had traveled far 
on the broad and pleasant road that leads to destruction. Then began an agitation 
which threatened the very existence of the society through the secession of individuals 
and entire lodges, but which resulted in a thorough investigation of its past ex- 
perience and the formulation of adequate rate tables for future use. With the 
adoption of these tables in 1854, the Unity opened a new chapter in its history which 
thenceforth has been an uninterrupted record of growth and prosperity. One more 
reform needed to be, and was, instituted in the decade ending in 1870, by which year 
quinquennial valuations had become compulsory. 

The record of the Unity demonstrates that it is quite within the capacity of the 
laboring classes to conduct a great business on democratic principles. It is an object 
lesson which justifies a most optimistic attitude toward future industrial conditions. 
As such, it has attracted the favorable attention of the actuaries, economists, and 
legislators of Great Britain, all of whom seem to have recognized the fact that they 
were confronted with a phenomenon of most hopeful import. It is regrettable that a 
similar movement in this country has received far less sympathetic treatment from 
experts and officials. Some reasons for this difference of attitude will be given 
later. 

In the United States, prior to 1868, there were no organizations closely resembling 
the British Friendly Societies. It is true that secret societies, such as the Freemasons 
and Odd Fellows, and trade unions were accustomed to assist distressed members, but 
such work was more or less incidental and not the main object of their existence. 
Furthermore, the help so extended partook of the nature of charity; that is, it was 
dictated by sympathy or fraternity instead of by contract. 

In 1868, however, John J. Upchurch, a Pennsylvania workingman, founded the 
Ancient Order of United Workmen, in the plan of which mutual insurance was 
dominant, although the features characteristic of secret societies in general were by 
no means ignored. In various centers in the State were organized local, self-governing 
lodges which were entitled to send delegates to the grand lodge at Meadville, the 
central legislative body, the elected officers of which managed the financial affairs of 
the society and compelled obedience to the by-laws on the part of the local bodies. 
In fact, the grand lodge, although a representative assembly, was the real source of 
authority, the self-government of the local lodge being based on sufferance rather 
than on right. 

As the society spread into adjacent States and additional grand lodges resulted. 
the supreme lodge was organized at Meadville in 1871, for the purpose of harmonizing 
the work. Its function is advisory, rather than authoritative, the grand lodges having 
declined to surrender their independence and having reserved the right to repudiate 
their allegiance to the supreme body. 

The rapid growth of the Workmen, indicating that it met a popular want, of 
course inspired imitation, and to-day there are in the entire country upwards of three 



106 

hundred fraternal beneficiary societies. They all have representative government, the 
lodge system and ritualistic ceremonies; in fact, these features are required by the 
statutes of most of the States. 

In respect of benefits offered and rates charged, they exhibit all the picturesque 
variety of which the untrammeled human fancy is capable. 

That there need be any particular relation between the respective values of the 
benefits promised and of the contributions charged never seemed to occur to the 
founders of these societies. 

In fact, all suggestions of that nature were brushed aside as smacking of theory 
and, therefore, unworthy of consideration by practical men who had competition to 
meet and could guess just as clearly as their rivals. 

In the seventies, a great impetus was given to the formation of fraternal beneficiary 
societies by the failures of old-line life companies and the startling disclosures as 
to the methods followed by some of the most prominent among them. 

To the disgruntled victims of old-line methods, the siren voice of the fraternal 
beneficiary society was sweet indeed. 

Within the sacred precincts of the lodge room they could denounce to a sympathetic 
audience the "outrageous treatment" to which they had been subjected by a "soulless 
corporation" and could resolve to demonstrate to the world the possibility of com- 
bining the business of mutual insurance with the practical exemplification of the 
golden rule. 

The idea was a noble one, albeit somewhat too elevated for present-day human 
nature and insufficiently enlightened by a knowledge of the cost of insurance. 

To fraternalists the mathematical reserve on life policies has always been a more 
or less unholy mystery. 

Having, in the old tontine days, seen this accumulation confiscated in the case of 
lapsing members, it was a natural inference that a similar course was followed in 
respect of the dead. 

Obviously these millions of reserve bore a sinister aspect and represented an 
unnecessary burden on the helpless policy-holder. 

Thus originated the popular battle cry of "Keep your reserve in your pocket." 

For many years the societies remained true to their principles and sedulously avoided 
accumulation, and only with the utmost reluctance did they begin to abandon the 
practice under the irresistible pressure of experience. 

In the oldest societies, such as the Workmen, business principles were at first 
completely subordinated to the demands of fraternity. 

No discrimination was allowed because of age, occupation, residence, or physical 
condition — all members were on a perfect equality. 

That such methods did not wreck the society before it was fairly launched is 
conclusive proof that the fraternal tie is more than an empty sentiment. 

Slowly, but none the less surely, the faulty system of the Workmen has been mended 
until now the supreme lodge urges with all the force at its command the adoption 
of a plan prepared under the guidance of a competent actuary. 

In other words, here, as in Great Britain, the common people have demonstrated 
their capacity to manage large enterprises on democratic lines. 

To one who has the welfare of humanity at heart, few signs could be more en- 
couraging. 

Comparatively few societies have imitated the Workmen's original example of a 
uniform rate of assessment at all ages. 



107 

We find the vast majority adopting the system of rates graded to admission ages 
and remaining level thereafter. Within a few years, a society so operated would find 
itself composed of groups, corresponding to entrance ages, each containing members 
of various ages paying the same rate. 

In short, a compound Workmen plan had been substituted for the original simple 
device, with little or no practical advantage. 

Of one society, the National Union, special mention should be made, because of 
the fact that it started on the step-rate principle, the rates being graded by ages and 
each member being required to pay the rate corresponding to his attained age on 
January first of each year. This plan was defective because of the fact that the rate 
schedule stopped abruptly at age 65, no adequate provision having been made for mem- 
bers who should pass that point. It is particularly gratifying to be able to say that 
this weakness has now been overcome through the efforts and upon the initiative of 
the officials of that Society. 

In course of time, the older societies began to experience difficulties. 

In spite of their most strenuous efforts, they found themselves compelled to levy 
assessments more and more frequently, with the result that they were unable to 
compete on equal terms with their younger rivals. 

The latter, having learned something from the experience of their predecessors, 
endeavored to prevent their own future decay by every fantastic device that the will 
of man could conceive. 

Some of these were actually patented, which fact would indicate that their inventors 
at least believed them to be effective. 

A study of these various schemes to secure the advantages of a mathematical 
reserve, without accumulating it, will convince any unprejudiced mind that the in- 
genuity of ignorance is still in active operation. 

Fortunately, the older societies do not find these vagaries attractive, but manifest 
a tendency to readjust along scientific lines, with the assistance of expert advice. 

An important distinction between the British friendly and the American fraternal 
beneficiary societies should not be forgotten. 

The main purpose of the former was and is the payment of sickness and funeral 
benefits, and, although some of them offer ordinary life insurance, the maximum risk 
assumed on any one life is 200 pounds. The American societies are essentially mutual 
life insurance organizations, although some of them pay limited sickness and accident 
benefits. The most popular certificates have a face value of $1,000 or $2,000, but not 
infrequently they are written for $5,000. 

The foregoing distinction may help to explain why in the one country the attitude 
of the actuaries is tolerant or sympathetic, while in the other it is hostile. Practically 
all of these gentlemen are, or have been, connected with old-line companies, and have 
thus become somewhat biased, perhaps unconsciously. 

The British societies occupy a field of their own, their competition with the business 
corporations being hardly perceptible. 

The American societies, on the other hand, are active and most successful com- 
petitors of life companies. 

Furthermore, the founders of the fraternal societies provoked the experts by 
sneering at them and ignoring their sometimes disinterested advice. 

At first glance the situation would seem to be unfortunate, but the indications 
are that it may result in the development of a new generation of actuaries, unfettered 
by traditions. 



108 

The fraternal beneficiary system is now in its forty-sixth year, and its amazing 
vigor is a source of perennial grief and astonishment to its old-line critics who re- 
garded it at first with the kind of intolerant contempt that Alexieff used to display 
toward the Japanese. 

It seems impossible for men to learn that there are more things in heaven and 
earth than are dreamed of in their philosophy. 

The Ancient Order of United Workmen which, by all the rules of orthodoxy, ought 
to have perished years ago, has been subjected to the fire-test and still lives. 

It is evident that we are here confronted with a phenomenon that defies mathe- 
matical analysis. The plans of the fraternal beneficiary societies may be simultaneously 
abhorrent to mathematics and acceptable to human nature. 

The policy-holders of an old-line company, even though it be the mutual variety, 
are practically impotent to affect its management, being without organization or 
knowledge of one another's ideas. As few of them can attend the annual meetings, 
they usually designate as proxies men of whom they never before heard, and of whose 
opinions they are blissfully ignorant. They feel and are as helpless as the depositors 
in a bank who place their trust in the honesty and sagacity of the officers and hope 
for the best. This is business, pure and simple, and to it business principles apply 
in all strictness. 

The members of a fraternal beneficiary society are organized in numerous local 
lodges, which hold meetings at least once a month and sometimes every week. Here 
the members become acquainted and here they discuss every detail of their co- 
operative enterprises. As the time approaches for the regular annual or periodical 
meeting of the supreme body, they elect thereto trusted representatives, whom they 
may instruct if they so desire. There develops in these members a very active feeling 
of proprietorship in their society and of loyalty to its interests. It is, so to speak, 
their child, and they will endure no inconsiderable sacrifices to conserve its existence. 
To such a condition, business rules and principles are inadequate, as they ignore the 
most vital feature of the phenomenon. 

That the foregoing is the true explanation of the failure of facts to verify 
actuarial predictions is indicated by another striking circumstance. 

About the time that the fraternal beneficiary movement originated there were 
organized on the same faulty plans, but with government similar to that of the 
old-line companies, a number of assessment associations. Although their officers were, 
as a rule, more keenly sensitive than those of the/ fraternals to approaching dangers, 
yet, with a single exception, due to peculiar conditions, every one of the original and 
prominent associations has disappeared or has been transformed into a legal reserve 
or stipulated premium company. As Carlyle would have said, "This is significant of 
much." 

As a direct result of the lodge system, the societies minimize the expense of field 
work. A comparison of the respective costs of management of the business com- 
panies and the fraternals is highly enlightening. 

If it be argued that lodge dues have been ignored in the comparison, the answer 
is that their main object is to pay for fraternal features for which there is no 
counterpart in an old-line company. Nor are these features imaginary. We find them 
sufficiently powerful to hold together vast societies like the Masons and Odd 
Fellows, which do not pretend to conduct an insurance business. Millions have been 
paid by the local lodges for the relief of members who were sick, injured, or out 
of employment. Other millions have been expended m social entertainment, which is 
a feature not to be overlooked when estimating what has been accomplished by these 



109 

bodies. I have noted, in many publications, slurs cast at this latter kind of ex- 
penditure. Those who belittle the social feature evince ignorance of one of the 
strongest points in favor of mutual insurance under the lodge system. 

Life insurance, per sc, is taken and carried for the protection of dependants. 
No benefit is realized until the death of the insured, and, consequently, he who carries 
and pays for the insurance has no other satisfaction from it than that derived from 
the consciousness that he has provided for loved ones in the event of his death. 
Of itself, such a performance indicates a high and noble purpose. 

Man owes a duty to himself, and when this can be combined with that owed to 
his family, much has been accomplished' toward the consummation of a perfect system 
of social organization. The lodge meetings not only provide the ordinary pleasures 
of social intercourse, but under the influence of the teachings of the ritual, they 
are an inspiration to higher ideals, and beget the altruism that turns the mind out- 
ward and makes men wish to live for others beside their own immediate families. 

This social feature of the fraternities has saved thousands from drunkenness and 
other forms of dissipation into which they otherwise would have plunged in their 
blind quest of pleasure. 

Many of these societies accept members of both sexes, and most of them absolutely 
bar alcoholic liquors from their lodge rooms. 

The combination of life insurance operation along with fraternal and social rela- 
tions is one that appeals to reason and sentiment and tends to popularize co- 
operative effort for mutual protection. 

The life companies have recognized this fact and have undertaken to minimize its 
effect by representing that they sold policies under which the insured did not "have to 
die to win." 

An important difference between the old-line and fraternal systems is in respect 
of elasticity. 

The life company is rigid, the contract being definite as to both benefits and con- 
tributions. For the sake of safety, the company is, consequently, obliged to over- 
charge. 

In the fraternals the amount that a member will be required to pay from year to 
year is seldom entirely definite. 

His assessment rate may be established in the by-laws, but almost invariably these 
are subject to amendment by the supreme legislative body. 

Furthermore, it is not unusual to find a provision whereby no claim can exceed the 
proceeds of one assessment on the entire membership. 

As the provision for expense of management is generally quite definite, there re- 
sults not only the ability to collect each year the exact cost of protection, but a 
most effectual discouragement of extravagance. 

The members have never shown a disposition to endorse the doctrine that the 
services of some men are worth from fifty to a hundred times as much as those 
of the average citizen, and, as a consequence, salaries above $5,000 are rare. Strange 
as it may seem to those conversant with old-line conditions, capable officers are 
secured without difficulty, in spite of the uncertain tenure of their position. The 
wisest selections may not always be made, but, on the other hand, the unfit do not 
survive. 

Democratic government naturally involves politics, and from the latter it must be 
confessed that the fraternals are not exempt. That this circumstance is to their 
detriment is by no means certain. Political aspirations are distinctly honorable when 
not tainted with graft. From suspicion of graft, the administration of the societies 



110 

has been singularly free. Although large sums of money have been handled, the 
losses that have occurred have been due almost exclusively to faulty judgment. Even 
such losses have been inconsiderable. In fact, in respect of both honesty and 
economy of management, the fraternals can well stand the test of comparison with 
old-line companies. 

Although enough has been said to indicate that the fraternal beneficiary system is 
in harmony with existing conditions in the United States, it will be useful to in- 
vestigate its prospect of permanence. 

In the first place, let it be premised that the failure of individual societies proves 
nothing against the principle upon which they were founded if other adequate causes 
are known to exist. The whole movement is still in the experimental stage, for which 
reason alone uninterrupted success would be little short of miraculous. 

Representative government has not in every instance proved equal to the tasks 
imposed upon it, but it has shown an ability to profit by experience. 

With few exceptions, the recent history of the societies under consideration has 
been most encouraging. There is every indication that the great majority of them 
will, through their own efforts and without compulsion, so reform their faulty plans 
as to assure their financial stability. 

They enjoy the advantages of representative government and have demonstrated 
their ability Jo modify their plans when the latter have proven unsatisfactory. 

They are attempting to provide cheap protection for their families and they 
are accomplishing their design, not perfectly it is true, but with really amazing 
success. 

A single one of these societies has since its organization paid in death claims not 
less than $225,000,000. This enormous sum of money has gone to the widows and 
orphans of men who would have carried far less insurance or none at all had it not 
been for the existence of the fraternals. 

Popular government has been sufficiently tested to justify my belief that the 
fraternal orders will not fail, in the long run, if let alone. 

They can be killed, doubtless, and against this danger the only safeguard is eternal 
vigilance. 

Their success, as I have already intimated, means much to the cause of humanity. 

No thoughtful observer can regard our present industrial regime as final. With 
its remittent warfare between capital and labor, it is obviously a temporary condition. 
By what is it to be succeeded? 

Shall it be the deadly stagnation of socialism, or shall opportunity be left for the 
development of individualism which has played so prominent a part in the history of 
the human race? 

Perhaps, if the great business of life insurance can be successfully conducted on 
democratic principles, the outlines of the answer may become discernible. 

Possibly capitalists, as a distinct class, may become as unnecessary as an hereditary 
aristocracy. 

One may be permitted to indulge the dream that some day capitalist and laborer 
may be combined in the same person, and that great industries may be competently 
managed by officers elected by the whole body of the workers There is nothing in- 
credible in the supposition, which is, on the contrary, in line with the course of human 
evolution. Such a condition would allow free play to individual ambition and tend 
to abolish strikes and the existing abnormal contrasts of wealth and social position. 

Since reforms are inaugurated by movement of the masses, and since five millions 
of the wage-earners and breadwinners in the United States and ten millions in 



1 1 1 

Great Britain are taking lessors in economical science from the best of all teachers, 
Experience, is it beyond reason to anticipate development of the mutual and co- 
operative principle underlying fraternal society management in the business relations 
between producers and consumers, the great majority of whom are the wage-earners 
and breadwinners of the country? 

To be more definite, let me call attention to the fact that the insurers and the 
insured are the same persons in a fraternal beneficiary society. 

The officials and managers are strictly and truly the agents of the members from 
whom the contributions are collected and to the beneficiaries for whom they are 
distributed. 

Xo capitalist stands between the contributing members and the dependants of 
deceased members. 

Only a central office, with competent agents in charge, is needed for the collection 
of millions from the many, and the distribution of the same in the payment of 
promised benefits. 

Why is it not possible to extend this principle of mutual cooperation, and 
entirely eliminate the capitalist and forever be rid of his exploitation of labor with 
its attendants of fricton and ferment? 

Will not the masses, some day, learn the general application of this principle? 

The fraternal beneficiary system has a profound significance ; it is symptomatic of 
the times, and what it needs is intelligent direction with a minimum of State in- 
terference. 

Any institution that has distributed to widows and orphans, within four decades, 
the enormous sum of more than seventeen hundred millions of dollars, $100,000,000 of 
which was paid out in 191 3, is certainly entited to serious consideration by those who 
make a study of political and social science. 

Two hundred of the existing societies have promised to pay death benefits amount- 
ing to more than nine thousand millions of dollars. The ability to fulfill their promises 
means much in more than four million of American homes. Penury, misery, and 
crime will result from inability to carry out their contracts of insurance. 



READJUSTMENTS. 

Readjustments have been necessary under all systems of life insurance. 

There could have been no development nor improvement without readjustments. 

In the early forms of life insurance there were no definite promises in the way of 
benefits or contributions. 

It has been a wonderful evolution from the "box," nailed to the wall of a public 
house from which charity pittances were dispensed, to the treasuries containing bil- 
lions for the protection of widows and orphans and the relief of the disabled and the 
aged. 

"Dreams in their development have breath, and tears, and tortures, and the touch 
of joy;" and not dissimilar has life insurance, in its growth and progress, its reverses, 
its trials, its failures and its final success. 

Many pages have been given to the history of life insurance organizations and 
their fanciful undertakings and their material accomplishments. The attainment of 
the goal of perfection is yet to be recorded. 

In the making for the ultimate end, original plans many times have been changed 
by the organizations which have survived the ordeal of conversion. 



112 

In so far as financial solvency is concerned the life companies have gone ahead of 
the fraternal beneficiary societies; under the whip, however, of State compulsion. 

Statutory standards were set and the life companies were compelled to measure 
up to them or go into the hands of receivers. 

Mortality demands forced changes in the plans and rates of fraternal beneficiary 
societies. No legislative enactment prescribed the test of adequacy nor fixed any 
standards as guides to financial solvency. In these circumstances there has been 
resort to every conceivable expedient to avoid the adoption of the simple, direct 
method of requiring contributions to provide for the promised benefits. 

Legislation and regulation placed life companies in a sound financial position, or 
put them out of business. The results of legislation and regulation applied to fra- 
ternal beneficiary societies will not be different. 

Situations in Great Britain and in America have been identical in respect of fra- 
ternal societies and their adoption of makeshifts rather than substantial reforms in 
their efforts to thwart the operation of natural law. 

In both countries inadequate contributions for the benefits promised have been 
characteristic of fraternal and friendly societies, and the universal practice has been 
to favor the older at the expense of the younger members. 

When the discrimination is disclosed to the younger members, and when it is pro- 
posed to require the older members to contribute in proportion to their equitable 
share in the losses, the former join the latter in denouncing such a proposition as "un- 
fraternal" and no more nor less than a scheme to freeze out the old man. 

Because it has been impossible to overcome this sentiment, I have been a party 
many times to the apportionment of accumulated funds to the use of those who had 
contributed nothing towards the accumulation. I have always stated the fact of ap- 
propriating what belonged to one for the advantage of another, but that other being 
an aged brother justified the act to those making the sacrifices. 

It seems never to occur to those who insist upon such apportionments, that all 
who are old are not indigent and in need of being assisted in the payment for their 
insurance protection ; that the young have most dependants and many times are sorely 
pressed to make their monthly contributions. 

These things I have urged to no avail, and to accomplish results I have ap- 
portioned funds as stated. I have never had a law suit over such an apportionment, 
whereas when rules of equity entered into the division of funds, in every instance, 
save one, a petition has been filed praying for an injunction against it. 

The first notable change from original to new plans was that of the Ancient Order 
of United Workmen in 1895, when the "Classified Plan" was adopted and the "Equal 
Levy Plan" abandoned — in so far as these things could be accomplished by the Su- 
preme Lodge. As a matter of fact, only such Grand Lodges as were in financial 
straits adopted the "classified" or so-called "step-rate" plan. The others for some 
time continued to levy $1.00 assessments on all members, regardless of age, whenever 
assessments were needed. 

The "Classified Plan" placed the membership in age-groups. Those who were 
18-24 paid at the rate for that group to age 25, then they paid an increased rate for 
five years until they attained 30 years of age. The advance continued to 55 years 
of age, when the rate per $1,000 at each assessment was $1.92 for the remainder of 
life. All members 55 years of age and older at the time of readjustment were given 
the level, whole life rate of $1.92 each assessment per $1,000. 



113 

When I ventured the opinion that the "Classified Plan" was unscientific, unstable, 
and inadequate, in that it would fail to provide for the protection at ages older than 
55, I was severely denounced by A. O. U. W. officials as an enemy to the fraternal 
system and altogether an undesirable person in the camp of fraternal beneficiary 
societies. 

In 1903 the Supreme Lodge of the Ancient Order of United Workmen officially 
recognized the inadequacy of the "Gasified Plan" and adopted for itself and re- 
quired Grand Lodges to adopt adequate, level and uniform rates graded to ages of 
entry, and applied at attained ages of existing members younger than a designated 
age. This limitation in their application created deficiencies too great for the con- 
tributions and funds. In consequence subsequent readjustments were necessary. 

With few exceptions every readjustment of contribution rates by fraternal ben- 
eficiary societies has favored the older members by rerating as of ages of entry, or by 
applying the rates as of attained ages younger than 49, 55, 60, 65, or 70 years of age. 

Seldom have the funds in hand at the date of readjustment been equal to the 
present value of the deficiencies created by granting to members contribution rates 
lower than required at their attained ages. 

However, in many instances, careful calculations have been made in the effort to 
limit the deficiencies to such an amount in present worth that it would not exceed 
the estimated present value of future gains and savings. 

Some of these estimates are being realized in practical operation. 

Others have not been realized, largely due to heavy withdrawals, adverse mor- 
tality experience and failure to introduce new members in numbers sufficient to 
neutralize the bad effects resulting from the change. 

It appears to have made little difference in resulting dissatisfaction and disruption 
whether or not large, or small, or no concessions were made to the older members. 

The mere fact of change in contribution rates created disturbances, withdrawals 
and adverse selection. 

In the readjustment of the Knights of the Maccabees of the World in 1904 and 
that of the Royal Arcanum in 1906, there were no increases of rates at ages younger 
than 55 and 65 respectively, so that the readjustments only immediately affected mem- 
bers older than those ages, yet the Maccabees lost upwards of 40,000 and the Royal 
Arcanum a somewhat larger number of members at the younger ages. 

The older members received great favor and in return complained and criticised 
and protested and indulged in bitter denunciation and instigated litigation and hesi- 
tated at nothing that would embarrass the management and — remained in the So- 
cieties. 

The younger members, alarmed or disgusted, quit. 

The action of the older members has been to their own disadvantage. By encour- 
aging the young to withdraw, or in assuming an unfriendly attitude to incite them 
to withdraw, the older members lose the obvious advantages from association and 
cooperation with the young. 

Had they been appreciative of the shifting of much of their burdens to other 
shoulders, and had they loyally helped to retain the young and assisted in securing 
new members, the deficiencies created by granting to them favors could have been 
overcome by the estimated gains and savings incident to cohesive mutual cooperation 
and an increasing membership. 

Wherever — and there are a number of such cases — the members have acquiesced 
in a rerating and have supported the management in its effort to increase the busi- 



114 

ness, no readjustment has failed because of deficiencies due to favors to old members 
where such deficiencies were within the estimates of the consulting actuaries. 

Many makeshift readjustments have been made on the initiative of members or 
their representatives contrary to the advice of actuaries and, though accepted by mem- 
bers, have proved a failure. 

It will be noted that I have referred only to changes in contributions under the 
mention of readjustments. 

However, one amongst the first readjustments (in 1898) was that of the American 
Legion of Honor, where the main feature consisted in reducing $5,000 certificates to 
$2,000. This was successfully resisted in the courts, and only with the consent of mem- 
bers, or in optional form, has it since been attempted to reduce benefits. 

In Great Britain the reduction in benefits has, more often been adopted, under the 
advice of actuaries, than to increase the contribution rates. The Actuaries for the 
Manchester Unity make the following interesting comments on the different methods 
of readjustment and their effect: 

It may be assumed that the deficiency is due to original unsoundness of principles, 
and that it has been accumulating for many years. Actuarily a reduction of benefits 
would be advised in such a case, but having regard to the preference for increase of 
contributions which is frequently disclosed, it is proposed to show the effect of all 
the measures that may be regarded as either practically or theoretically possible. As- 
suming that the whole of the deficiency is to be removed these measures may be stated 
as follows : — 

(a) Reduction of the sick benefits to 10/- per week for 26 weeks; 5/- per week 

afterwards. 

(b) Reduction of the sick benefits to 12/- per week for 26 weeks; 6/- per week 

for 26 weeks ; 3/8 per week afterwards. 1 

(c) Division of the deficiency amongst the members pro rata to length of 

membership, and conversion of the amount debited to each member into 
its equivalent annual contribution. 

(d) Division of the deficiency amongst the members in equal sums and con- 

version of the amounted debited to each member into its equivalent 
annual contribution. 

O) Increase of the contributions by an equal sum per member without regard 
to duration of membership or age. 

Each of these measures will have a definite and ascertainable effect in money value 
upon the contract into which the society has entered with each member. In order to 
contrast these values it is convenient to set them out at each age in parallel columns; 
this is done in the following statement: — 

Cash Value of Deficiency Debited to Each Member by 



GE. 


Method. 


Method. 


Method. 


Method. 


Method 




(a) 


(b) 


(c) 


(d) 


(*) 




£ 


s. 


£ 


s. 


£ s. 


£ s. 


£ s. 


20 


3 


17 


2 


14 


Nil 


5 1 


6 10 


30 


4 


9 


3 


14 


3 2 


5 1 


5 16 


40 


5 


5 


5 


2 


6 3 


5 1 


4 18 


50 


6 


4 


7 





9 4 


5 1 


3 19 


60 


7 


6 


9 


14 


12 6 


5 1 


2 16 


70 


8 


4 


13 





15 8 


5 1 


1 16 



Before considering these figures it will be convenient to show the equivalent annual 



115 

contributions to the cash shares of deficiency debited in effect to each member by 
methods (<:), (d) and (e). These are as follows: — 

Age. Method. Method. Method. 

(c) (rf) (*) 





£ 


s d 


s 


d 


s 


d 


20 




Nil 


4 


4 


5 


7 


30 





3 


4 


10 


5 


7 


40 





7 


5 


8 


5 


7 


50 





13 


7 


2 


5 


7 


60 


1 


3 10 


9 


10 


5 


7 



70 257 15 o 57 

Dealing first with the cases of increase of contributions, it will be agreed that in 
principal, method (c) is, of the five plans, the most equitable, but on referring to the 
statement of equivalent contributions it is seen that the amounts under this method 
increase rapidly with age and result at the age of 60 in more than doubling' the con- 
tribution hitherto paid, and at the age of 70 in the increase of such contribution by £2 
5s. 7d., i. c, from 19/6 per annum to £3 5s. id. Such a method, however desirable in 
theory, is therefore wholly impossible of practical application. Method (d) is less 
equitable theoretically, and practically is also excluded by the large increase of con- 
tributions at the old ages which it necessitates. Method (e) — uniform increase of con- 
tributions — is the system generally preferred by friendly societies, but it will be seen 
to be the most inequitable of all the possible plans, as it places the maximum, charge 
upon the youngest members who by hypothesis have created no part of the deficiency, 
and debits the minimum liability to the oldest members who are responsible pro- 
portionately for the existence of the greatest part of the deficiency. 

Reverting to the alternatives of reduction of sick pay, it will be seen that method 
(a) — reduction of all benefit by one-sixth — whilst inequitable so far as it places some 
part of the deficiency on the younger members, does, at any rate, act in the direction 
of equity by debiting a minimum sum to the youngest and a) constantly increasing 
charge (up to the age of 70) on the older members. Method (b) is still less inequi- 
table both in its effect upon the younger members and as giving a charge at the higher 
ages approximating to that presented by method (c), which as above suggested, may be 
regarded as the theoretical ideal. 

From these examples it is clear that the reduction of benefits will operate more 
equitably, in general, than the increase of contributions on any scale that would be re- 
garded as practicable, and if the reduction of benefits be advised in the valuation re- 
ports it will be wiser of lodges to accept that course, and if need be to give young mem- 
bers the opportunity of effecting new assurances, according to present ages, of such 
additional benefits as will bring the amounts up to the original scale, than to repudiate 
the actuarial recommendation and to substitute some uniform increase of contribu- 
tions in which no regard is paid to the relative values of the burdens respectively placed 
upon young and old members. 

Sufficient has been written to show that the favorite method of uniform increase 
of contributions is, of all practicable plans of dealing with deficiencies the most in- 
equitable in operation. It remains to be shown that it is the least effective. The cal- 
culations have proceeded so far upon the assumption that all members remain in the 
assumed society, and accept the sacrifices imposed upon them, but the position should 
also be examined on the assumption that (a very general consequence of reforms) the 
young members refuse to agree to the changes and withdraw. At the youngest age the 
full benefits and contributions are of practically equal value, and any change in either 
the one or the other sets up "negative values," which are immediately lost on the with- 
drawal of the members concerned. If, therefore, it be assumed that the 30 members 
taken as at the age of 20 withdraw, the deficiency is partially restored by all methods 
except (c). Such restored deficiency with the corresponding proportion of assets to 
liabilities is as follows : — 

(a) Deficiency, £109; percentage of assets to liabilities, 95. 

(b) Deficiency, £ 70; percentage of assets to liabilities, 97. 

(c) Deficiency, Nil ; percentage of assets to liabilities, 100. 



116 

(d) Deficiency, £153 ; percentage of assets to liabilities, 94. 

(e) Deficiency, £193; percentage of assets to liabilities, 92. 

Whilst method (c) alone would leave the position unaffected, the adoption of 
method (e), embodying the equal increase of contributions would be followed by the 
re-appearance of over one-third of the original deficiency and the decline of the assets 
to 92 per cent of the liabilities. The results produced by such method would conse- 
quently fall seriously short of those intended, and the necessity for a further adjust- 
ment at a very early date would be set up. When the second adjustment came to 
be made it would be found the more difficult of application because the society would 
have lost all its youngest members and would have to impose an entirely undeserved 
burden upon the younger of those remaining. 

It may be suggested to us that the withdrawals resulting from the adoption of re- 
formative measures are not confined to young members, and that the profits from seces- 
sions at the more advanced ages will be sufficient to counterbalance the losses sus- 
tained by the lapse of youthful contributors. In some cases, and to some extent, this 
may be the experience; but, as we explain elsewhere, the members of advanced age 
who withdraw are very frequently persons of superior health or financially independent 
of the sick pay, and the result of their defection is to lessen the contribution income 
whilst leaving the volume of claims virtually unaffected ; an apparent immediate profit 
being thus neutralized by a subsequent increase in the rate of sickness amongst the 
members remaining. The expectancy of profit from this soured is, therefore, in great 
measure, illusory and little weight should be given to it. 

As a final experiment we have assumed that no measures are taken for the rectifi- 
cation of the position and that the society maintains the present financial arrangements 
until the funds are exhausted and it breaks up. We have ascertained what is the 
present equivalent of the average financial loss sustained by those members who will 
be surviving at that date, which we find to be 35 years distant; and when, therefore, 
the youngest member will be aged 55. For greater clearness we have assumed that no 
new members will be admitted. This assumption in no way lessens the value of the ex- 
periment, for whilst new members accepted on contribution terms that are adequate 
as regards their own benefits may prolong the life of a society in deficiency they cannot 
perpetuate it. Collapse is inevitable if no reformative measures are taken, and it is 
merely a question as to which particular members are to be the victims. 

It is found, then, in the event supposed that the funds are exhausted after 35 years, 
at which period the total number of members surviving will be 43. On ascertaining 
the average amount of funds that ought to be in possession at that date in respect of 
each member, and allowing for interest from the present up to that time, the follow- 
ing represents thei loss per member sustained, this being exhibited according to the 
present number and ages of the members. 

Present Value of Average Loss 
per member (for all members now 
Present existing) by exhaustion of fund 

Age. after 35 years 

£ s d 

20 8 10 o 

30 8 16 10 

40 4 19 o 

50 o 14 8 

60 : Nil 

70 Nil 

Thus the greatest loss falls upon the youngest members — those now aged 20 and 
30 — whilst in the case of the present old members, whose lifetime the Society will last 
out, the loss is nil. The effect, on the average, of repudiating reform in such a case 
may be described as taxing a man of 20 to the extent of £8 10s. od., having already 
charged him the full contribution for his benefits, whilst putting no tax whatever on 
the man of 70 to whose original shortcomings (with those of his deceased contempora- 
ries) the deficiency is attributable. 

It will be noted that in the above table the average loss per member existing at 
each present age is given. Whilst all surviving will be too old to join another society 



117 

35 years hence, and in that sense will suffer positive loss, the members most affected 
by the collapse of the society will be those whose deteriorated' condition of health, or 
perhaps actual invalidism, will have made them prospective claimants of large amounts. 
It is clearly impossible to gauge the full extent of the injury sustained in such cases, 
and as no young member can foresee whether he personally will be so situated many 
years hence as to need the constant help of his society, it should be realized by each 
one that whilst the average loss is serious there is a probability that the loss to him 
individually may be far in excess of that average. 

I desire to direct particular attention to the concluding paragraphs. 

Court decisions in this country prevent a readjustment by reduction of benefits, 
unless with written consent of the insured, nevertheless the Messrs. Watson clearly 
demonstrate that greater equity can be obtained by reducing benefits than by increasing 
contributions. 

The reason why inequity results when contributions are increased is that it isf im- 
practicable to make the increase for advanced ages proportionate to the deficiencies 
created by the aged members. 

This is strongly brought out by the analysis of readjustment plan (c), which 
Messrs. Watson declare to be the ideal reformative measure, considered theoretically, 
but impractical when applied to actual conditions : 

The effect of a readjustment which goes to the extreme in burdening the young 
members, such as indicated by plan (e), is forcibly demonstrated by the Unity Ac- 
tuaries. 

The effect of doing nothing is graphically set forth in the concluding demonstrations. 

At a small outlay the Eighth Valuation Report, made by the Messrs. Watson, can 
be secured from the Manchester Unity Offices, 97 Grosvenor Street, Manchester, Eng- 
land, and I commend it to those who desire to pursue this subject. 

The general method for readjustments in the United States and Canada has been 
to increase the contribution rates, with options for continuing the existing rates and 
having designated amounts charged as liens against certificates to be deducted at death 
(sometimes with and sometimes without interest). 

When actuarial advice has been ignored or never sought the favorite method has 
been to adopt a net contribution scale according to some standard table of mortality 
(most often the National Fraternal Congress Table of Mortality and 4 per cent in- 
terest) and apply these rates as of ages at entry into the Society, and to apply the 
same rates to new members at their attained ages ; on entering the Society. All mem- 
bers were then put into mutual cooperation and the excess contributions of the recent 
entrants commingled with the common funds, and largely, if not entirely, used to make 
good the deficiencies in the rates of the older members. 

This combination of inadequacy and injustice could end in nothing but failure. 

With readjustments must not be confused the heretofore common practice of so- 
cieties adopting new contribution scales for new members while leaving the old mem- 
bers on original schedules, and then commingling contributions and accumulation to 
the great advantage of the older members, and equally to the detriment of the entrants 
upon the increased rates. 

The rerating of members at ages of entry, but compelling them to contribute on the 
same scale as new members, being justly characterized as unfair and inequitable to the 
recent entrants, where the latter are placed into the class with existing members, it 
is unnecessary to comment upon the method of leaving existing members upon inade- 
quate rates, and placing new members upon an increased, and often a per se adequate 
scale, and then making one class of the whole membership. 



118 

The readjustments of rates by Societies of the United States and Canada have al- 
most universally favored two classes of members ; one class being those at advanced 
ages and the other those who have been members for a number of years. 

The results of such readjustments have always created deficiencies by the conces- 
sions granted to these two classes of members. 

Notwithstanding these concessions, it has been the exception when the readjust- 
ment was accepted by the membership without dissatisfaction, dissension and with- 
drawal. Usually the withdrawals being of the good lives. 

Even with the most liberal concessions, rates of contribution for the members at 
advanced ages were very high when consideration is had of the very low rates of 
contribution which the members had been accustomed to paying. This fact has al- 
ways caused dissatisfaction amongst the aged members, which has been reflected upon 
the younger, resulting in heavy withdrawals, and these withdrawals have in turn 
affected the death rate of the remaining members unfavorably. 

In most instances the adverse selection due to withdrawal of young and recent 
entrants has passed away within two, three or four years, and a return to normal 
death rate has been the rule. However, I have known cases where the adverse and 
unfavorable conditions continued indefinitely, making a second readjustment neces- 
sary. In cases where this second readjustment did not place the organization in a 
financially sound condition, ordinarily a third change resulted in decay and final 
dissolution of the Society. 

A large number of Societies have adopted readjustment where the members 
younger than a certain designated age were required to pay as of their attained ages 
the contribution rates based upon some standard mortality table, while the members 
older than the designated age have been given ai rate less than that for the attained 
age and many times have been given the level rate as of the designated age, say 55, 
60 or 65 or 70. In these cases, of course, the Society was divided into two classes, 
one being those who were favored with rates less than the attained age at the time 
of the readjustment and others charged the full rate under the assumptions of some 
mortality table, usually the National Fraternal Congress Table of Mortality with 4 
per cent interest. 

In a number of cases the readjustment has been made so that the members younger 
than a designated age have been charged the rate according to some standard table 
as of their attained ages at the date of rerating, while members older than the 
designated age have been given a lower rate than the one justified by their attained 
ages, and in addition to this all of the available funds of the Society have been 
assigned for the purpose of meeting the deficiency created by the concessions to the 
aged members. 

One Society with about 30,000 members assigned upwards of a million dollars to 
the members above age 65, while another Society assigned upwards of three millions 
of dollars to members above age 55. Tn another instance something over two mil- 
lions of dollars were assigned to members according to the duration of member- 
ship; no member receiving any credit who had not been a member for at least 
eighteen years; and this assignment was increased according to the advanced age 
of the members. The amount assigned to tlie youngest members, entitled to credit 
because of duration of membership, was a few cents, while to the oldest members 
the credit was several hundred dollars on each thousand of insurance. 

In a noted readjustment where no funds had been accumulated prior to the re- 
rating, the Society adopted rates for members to age 65 with a level and uniform 
rate thereafter. The rates below age 65 were loaded for a fraternal contribution 



1 19 

which was levied upon all members below a designated age and added to their 
rates, which latter were sufficient to provide for their protection. The younger 

members have never been heard to make any complaint on account of this extra 
charge against them for the purpose of rendering aid to the members above a cer- 
tain age. There prevails a general sentiment that aged members, regardless of 

whether or not they need assistance, should have something appropriated from the 
Contributions of the younger members for their relief from the payment of assess- 
ments according to their ages and the risk assumed by the Society. 

Comparatively few readjustments in the United States and Canada have hem 
upon a thoroughly adequate basis from the beginning. Ordinarily, in the course of 
operation, other changes have been required to place the organization in a sound 

financial position. These second changes are dangerous, as well as difficult. The 

Societies in their present condition are now: confronted with these dangers and diffi- 
culties which are aggravated by the situation in respect of securing new business. 

When the Societies were comparatively new and the membership massed at the 
younger ages and the contribution rates lower, business was easily and cheaply 
-(cured. When the Societies were older and the membership at the advanced ages 
and contribution rates increased, then the situation was entirely changed in reference 
to the field work. The members discontinued their efforts in the way of securing 
new members, and the whole work was left entirely to deputies and organizers. This 
brought about a condition not materially different from that existing in the Life 
Insurance business in respect of the company employing agents. The mere fact of 
calling the solicitor "deputy" or "organizer" has not made the cost of their service 
materially less than the cost of employing life insurance agents. In these circum- 
stances the cost for securing* members by fraternal beneficiary societies approximates 
the cost of getting policy-holders for life insurance companies. 

It has long been the slogan of the fraternal societies that their expenses have 
been only a small percentage of the expenses of life companies. When the require 
ments for expense increased, managers of fraternal societies have adopted many 
devices in the effort to meet these requirements without direct taxation of the mem- 
bership. In fact, it has been impossible for them to colled in the way of a per capita 
tax the amount necessary for expenses, and when they load the net contribution rates 
sufficient to cover the expenses, then the rates are so high that members complain 
and say that they are compelled to pay as much to the fraternal societies as they 
would have to pay to the life companies, with the apparent conclusion that if they 
make as large contributions to the fraternal societies as to the life companies, then 
they must, by reason of that fact, prefer the companies. Therefore, one of the most 
serious conditions arising out of readjustments of contribution rate- is the one in 
reference to the expense of management and of securing new business. 

PROVISION FOR EXPENSES. 

Previous to [QOO it was the exception for total expenses for general management 
of a fraternal beneficiary society to exceed $2.00 per member per annum. 

When new members were introduced they were required to pay an initiation fee 
of $3.00 to $10.00. If the fee was low, then the apph'cant was required to pay for his 
medical examination. 

There were few paid solicitors, and the original Uniform Bill, prepared and advo- 
cated by officials of fraternal societies, made it a condition precedent to admission 
to do business in the States that the society should not have paid solicitors or agents 
cure members for an organized lodge. 



120 

There were paid organizers and lecturers whose duties were to organize new 
local bodies, and for that purpose to solicit members until the requisite number for 
organization was secured, and then to visit organized bodies and enthuse the members 
by public talks and entertainment. 

After the employment of paid solicitors, or deputies, the local bodies could say 
whether or not their lodges were "open" or "closed" to them. 

Very often the local lodge would elect from its members a deputy or solicitor to 
be paid from the lodge funds. 

Other lodges depended entirely upon the work of the members, and the initiation 
fees went into the lodge treasury for entertainments. 

Many societies then (and a few now) had State jurisdictions which were required 
to bear the expenses and perform the work of securing new members. 

In all cases the initiation fee covered the expense incident to the introduction 
of new members, excepting the work and indirect influence of organizers and lec- 
turers who were usually paid from the general funds of the supreme body. 

Those societies which were first to adopt adequate contribution scales for new 
members found it impossible to collect the initiation fee when charging a rate for 
the same promised benefit 25 per cent, 50 per cent and 100 per cent in excess of the 
assessment rates of competing societies on inadequate contributions. 

Losing the initiation fee compelled resort to other means to obtain expenses to 
secure new business. 

To add a sufficient percentage loading to the already (comparatively) high net 
adequate rates so increased the contributions that few officials believed it possible 
to secure new business, and a common practice was to appropriate for promotion 
expenses the first one, three, six, eight, nine and even twelve monthly payments. 
This, of course, rendered otherwise adequate rates deficient, and increased the in- 
adequacy of those approximately adequate. 

Some societies took the chance of securing new members in the old way and at 
the old low assessment of for expenses, but soon discovered that the increased rates 
under readjustment (for several reasons) caused the members to discontinue their 
efforts to bring in new members, and their apathy — or worse — made successful deputy 
work very difficult as well as very expensive. 

This condition induced conservative and experienced officials to encroach upon 
the net contributions (already burdened with deficiencies due to concessions granted 
to aged members under readjustment). This practice was quite general and was 
excused on the plea that it was only a temporary expedient to meet an abnormal 
situation. 

Conditions after readjustment were so trying and the difficulties so great that I 
have consented to such expedients, hoping and trusting that the judgment of the 
officials was correct, and myself believing that dissension, dissatisfaction and agita- 
tion could not continue for more than two or three years, and on recovery to normal 
condition the appropriation from the net contributions could be discontinued. It 
appeared better to take this risk than to create new disturbance by calling for addi- 
tional expense contributions. 

No one can appreciate the difficulties following an adequate rate readjustment 
unless he has had to meet and try to overcome them. Anyone so situated will take 
chances with hope on the prospect of future favorable conditions rather than aggra- 
vate troubles due to no fault of the management. 



121 

In many cases the hope was realized. In most instances the increased fund for 
expenses brought about high-pressure methods, and new members were introduced 
at the front only to make their exit at the back door. 

Bonuses, prizes, excursions, tours and large cash commissions were offered, with 
the usual result of such methods that members were lost almost as. fast as secured 
with small gain from large expenditures and often an adverse mortality experience 
amongst the members at admission ages, due to the nearly equivalent influx and 
efflux of fresh lives and the natural sediment from such flow in the way of early 
deaths and impaired risks. In other words, any such method for securing new busi- 
ness makes of the society a duct, with refuse and settlings the main leavings. 

I have protested in vain against the inauguration of such methods, often consent- 
ing to a moderate temporary encroachment upon net contribution rates. The field 
men would clamor for larger appropriations, and the officials and agency managers, 
in their laudable desire to prevent loss in membership, would yield to pressure, with 
ultimate unsatisfactory results. 

At this writing, all of the societies (with few exceptions) have changed contribu- 
tion rates to some degree, and nearly all of them are struggling to maintain their 
business without taxing the members with increased expense charges. 

There are various methods for creating an expense fund. 

Some societies rely entirely upon a per capita tax. Some have a per capita tax 
and an additional level or percentage loading to the net rates. Some have a per 
capita tax and take a stated number of the first twelve monthly assessments. Some 
take a percentage of the gross rates and, in addition, use all or some portion of the 
first twelve assessments. Others take a flat amount from the gross rates and use 
all or a portion of the first twelve assessments. Others take a flat amount (or per- 
centage) of the gross rates and in addition 50 cents, 60 cents, 75 cents to $1.00 from 
each of the first twelve monthly payments. 

There are numerous other methods to provide for expenses, but the above will 
cover the majority of cases. 

There is no fixed rule for general application in the provision for expenses. 

The method of taking from the first twelve assessments a level amount of 50 
cents, 60 cents, or 75 cents, and then having a per capita tax, or in subsequent years 
deducting a flat (or percentage) amount from the gross rates, more nearly than any 
other accords with the old practice of a per capita, or flat or percentage loading, 
and an initiation fee. The deduction of 60 cents per month ($7.20 a year) provides 
about the average initiation fee, and when its value in the way of annuity addition 
is loaded into the rate the member pays back to the society the amount of the deduc- 
tion. Formerly he paid the initiation fee in one sum or in two, four or twelve in- 
stalments. He pays back the $6.00, $7.20 or $9.00 by instalments covering the period 
of protection, and thus each instalment is small and is therefore paid without objec- 
tion. It is a device for collecting the initiation fee from an entrant without his 
special knowledge of the fact. 

Many conferences have been held by officials and managers of fraternal societies 
concerning "adequate rates," and many supreme bodies have passed upon the ques- 
tion of "adequate rates/' but no concerted attempt has been made to come to an 
agreement in regard to expense provision, and yet this is a matter of so much im- 
portance that the failure to properly and effectively provide for expenses may result 
in financial insolvency. , 



122 

FRATERNAL EXPERIENCE TABLES. 

In 1904 a number of the leading fraternal beneficiary societies readjusted contri- 
bution rates on the basis of the National Fraternal Congress Table of Mortality. 
The readjustment agitation was so general that question arose as to the sufficiency 
of the N. F. C. table, resulting in a request from the president of the members of 
the Congress to supply data for a test of that table. 

The suggestion of President Talbot was favorably received, and, under instruc- 
tions of the Congress, the Committee on Statistics and Good of the Orders made a 
report in 1906 at Montreal, from which I take the following: 

Your committee herewith submits its special report to which reference is made 
in the regular report concerning the collection of data of the societies under a reso- 
lution offered by Doctor Oronhyatekha, past president, at the last session of the 
Congress, which resolution was as follows: 

"Resolved, That the executive committee of this Congress be authorized to take 
such steps as they may deem best to secure correct data for a minimum table for a 
society in a normal condition, based on the experience not only of societies but the 
experience of life insurance companies as well." 

Letters were sent to all of the societies in the United States requesting the data 
on forms which were supplied by the chairman of the committee, a sample of which 
is attached to this report as an exhibit and which fully sets forth the information 
which was desired and which was supplied to the actuary for such societies as fur- 
nished the same. The names of the societies responding are as given below, grouped 
according to whether or not they admit men only, women only, or men and women: 

SOCIETIES ADMITTING MEN ONLY. 



NAMES. 



Commenced 
Business. 



Members, 
Dec. 31, 1904. 



Exposures 
During 1904. 



Knights of Maccabees of the World 

Modern Woodmen of America 

Shield of Honor 

Society des Artisans 

Catholic Mutual Benefit Association 

Knights of Father Mathew 

Improved Order of Heptasopiis 

Knights of Pythias, Endowment Rank 

Knights of Honor 

Ancient Order United Workmen (22 Juris) 

Knights of Modern Maccabees 

Tennessee Jurisdiction of A. O. U. W 

National Union 

Royal Arcanum 

Loyal Association 

Woodmen of the World (I*ac. Juris.) 



1883 
1883 
1875 
1877 
1876 
1881 
1878 
1877 
1873 
1868 
1881 
1875 
1881 
1877 
1889 
1890 



325,071 

690,881 

13,204 

23,020 

57,028 

4,124 

55,377 

68,202 

40,126* 

219,490 

116,205* 

1,911 

65,372 

305,083 

7,246 

90,680 



341,255.0 

689,265.5 

13,074.5 

21,647.5 

59,221.0 

4,038.0 

55,228.0 

67,582.0 

46,129.5* 

248,790.5 

119,684.5* 

2,025.5 

66,993.5 

295,673.0 

7,115 

90,687.0 



Totals. 



2,083,020 



2,128,410.0 



SOCIETIES ADMITTING WOMEN ONLY. 



NAMES. 


Commenced 
Business. 


Members, 
Dec. 31,1904. 


Exposures 
During 1904. 


Ladies of Maccabees of the World 


1892 
1895 
1890 
1890 


123,434 
83,423 
61,880 

89,808 


119,367.5 


Royal Neighbors of America 


79,292.5 


Ladies of the Modern Maccabees 


60,176.0 


Ladies' Catholic Benevolent Association 


89,392.0 






Totals 


358,545 


348,228.0 



123 
SOCIETIES ADMITTING MEN AND WOMEN. 



NAMES. 



Commenced 
Business. 



Members 
Dec. 31, 1904. 



Exposures 
During 1904. 



American Benefit Association 

Association Canado-Americaine 

Equitable Fraternal Union 

Fraternal Brotherhood 

Loyal Mystic Legion of America 

Order Mutual Protection 

Order of the White Cross 

Protected Home Circle 

United Order Pilgrim Fathers 

Sons and Daughters of Protection 

United Presbyterian Mutual Benefit Association. 

Legion of the Red Cross 

Royal Highlanders 

Court of Honor 

Mystic Workers of the World 

Prudent Patricians of Pompeii 

United Order of Golden Cross 

Fraternal Mystic Circle 

Knights and Ladies of Security 

Fraternal Union of America 

Modern Samaritans of Duluth 

Fraternal Tribunes 

Royal Templars of Temperance 



1893 
1897 
1897 
1896 
1892 
1878 
1900 
1886 
1879 
1897 
1897 
1885 
1896 
1895 
1896 
1897 
1876 
1885 
1892 
1896 
1897 
1897 
1870 



5,101 

5,298 

14,644 

23,412 

6,718 

8,101 

1,836 

55,736 

19,698 

1,794 

3,128 

2,549 

18,553 

67,815 

32,550 

7,379 

18,558 

14,503 

46,161 

24,045 

6,758 

9,696* 

7,620f 



Totals . 



401,653 



4,936.5 

5,219.0 

13,561.0 

22,048.5 

6,707.5 

8,133.5 

1,688.5 

58,652.0 

20,986.0 

1,842.0 

3,212.5 

2,666.5 

17,775.5 

68,612.5 

30,961.5 

7,343.0 

19,620.5 

15,396.0 

44,924.0 

24,047.5 

6,437.0 

9,103.0* 

9,654.5f 



403,528.5 



SUMMARY. 



NAMES. 


Number of 
Societies. 


Members, 
Dec. 31,04. 


Exposures 
During 1904. 


Societies admitting men only 

Societies admitting women only 

Societies admitting men and women 


16 

4 

23 


2,083,020 
358,545 
401,653 


2,128,410.0 
348,228.0 
403,528.5 


Totals ' 


43 


2,843,218 


2,880,166.5 



NOTE. — Numbers marked with * give data for 1905 instead of 1904; numbers marked with 
t give data for 1903 instead of 1904. 



The committee desires to thank the officials of the above named societies for their 
compliance with the request to supply the data and also to thank the secretaries for 
the neatness of the forms submitted. 

Many of the reports gave the data by amounts, and as it was decided that the 
experience should be based upon lives instead of amounts of protection, it was 
necessary in many cases to make combinations, which required a considerable amount 
of work in the office of the actuary. 

The committee has inspected and examined all of the original reports, together 
with the compilations made therefrom; also the tabulations and deductions after- 
wards prepared and which are now subject to inspection by any member of the 
Congress. It is impossible for your committee to render a detailed statement that 
would present the amount of work which has been done by the actuary inasmuch as 
the compilations and tabulations fill hundreds of large sheets. Perhaps only those 
whose business it is to work with statistics can fully appreciate and realize the amount 



124 

of labor necessary to produce one column of figures representing the death rate of 
the 43 societies. Each one of the 43 organizations sent in three sheets showing the 
members in good standing at the end of the year of observation and the member 
who had lapsed and died during the year. These statistics were not combined so 
as to obtain three corresponding sheets with a combined showing of existing mem- 
bers and of members who had lapsed and died, and from this latter the combined ex- 
posures obtained, but the actuary worked out separately for each society the exposures in 
order to obtain the death and lapse rates for each one individually. Seven separate sheets, 
as hereinafter stated, were prepared for each of the 43 societies and these should be 
taken into consideration and inspected by the officials of each society. After ob- 
taining the individual statistics for each society and treating them as above indi- 
cated, the four separate combinations were made as heretofore stated, for societies 
that admit men only, that admit women only and that admit men and women and 
then {or all of the societies combined. The work consisted in preparing data from 
each of the 43 societies which could be used in constructing mortality tables for each 
of the societies. Your committee repeat that it is almost impossible for anyone 
to fully appreciate the amount of labor involved unless he make personal inspection 
of the trunk full of papers which have been submitted to your committee by the 
actuary. 

To obtain exposures for death rate there was taken the sum of all the members 
in good standing at the end of the year who had entered the society in previous 
years and one-half of all of the members existing at the end of the year who had joined 
the societies during the year and one-fourth of all the members who lapsed during 
the year and all of the deaths during the year. 

To obtain the exposures for lapse rate there was taken the sum of all the mem- 
bers existing at the end of the year of observation who had entered the society in 
previous years, and one-half of all the members existing at the end of the year who 
had entered during the year, and one-fourth of all the members who died during the 
year, and all of the members who lapsed during the year. 

To obtain the death rate the number of deaths during the year was divided by 
the number of exposures. 

To obtain the lapse rate the number of lapses during the year was divided by 
the number exposed to the risk of lapse during the year. 

The death rate obtained as above mentioned is the unadjusted death rate accord- 
ing to the actual experience of the societies. This unadjusted death rate, as will 
be seen by reference to the tables herewith submitted, is irregular by attained ages 
and by years of membership. Not only is this original and unadjusted death rate 
irregular, but it embraces only those years covered by the experience of the societies, 
which in this case is for thirty-four years of membership and to age ninety for the 
oldest exposed risk. In order to convert this unadjusted data into practical form 
it was necessary to grade and extend the unadjusted death rate. 

There are several well known formulas by which the mortality experience can be 
graded or adjusted. One is the so-called "Makeham" formula, which recognizes the 
"Force of Mortality." Another is by the graphic method, and still another by the 
summation method, which latter was adopted in the grading of the mortality ex- 
perience herewith submitted. In the case of the forty-three combined societies and 
in the case of the experience for men only and for men and women the formula 
selected was that used by Mr. Watson in grading the experience of the Manchester 
Unity. The one selected for grading the experience of the societies that admitted 
women only was the "Hardy" formula given in his prize essay on Friendly Societies. 
There were several gradings or adjustments by different formulas, but the ones just 
mentioned gave the most satisfactory results as evidenced by the tests of the grading 
submitted by the actuary. 

The actuary has given the number living and the number dying, assuming 100,000 
lives at the lowest age, according to the unadjusted and the adjusted death rate for 
the combined forty-three societies. 

The committee have thought it advisable to make the above brief explanation 
for the benefit of those who may desire to critically examine the statistics and de- 
ductions submitted by the actuary. 

It is assumed that the members of the Congress will be most interested in the 
rates of contribution which have been derived from the several mortality tables 
herewith submitted. For the information of the members we present in comparative 
form the net annual level rates of contribution per one thousand dollars protection, 
for death benefit only, according to the National Fraternal Congress Table of Mor- 
tality and according to the combined experience of the forty-three societies as ob- 



125 



NET ANNUAL RATES OF CONTRIBUTION PER $1,000. 



Age. 


N. F. C. 


43 Societies. 


Women. 


Men. 


Men and 
Women. 


17 


$ 


$ 9.25 


$ 9.29 


$ 9.20 


$ 8.98 


18 




9.48 


9.50 


9.45 


9.23 


19 




9.73 


9.71 


9.73 


9.48 


20 


10.34 


10.01 


9.94 


9.99 


9.75 


21 


10.62 


10.30 


10.18 


10.30 


10.04 


22 


10.92 


10.58 


10.44 


10.58 


10.32 


23 


11.24 


10.90 


10.70 


10.90 


10.63 


24 


11.57 


11.22 


10.99 


11.24 


10.95 


25 


11.91 


11.56 


11.29 


11.59 


11.29 


26 


12.28 


11.94 


11.62 


11.99 


11.64 


27 


12.67 


12.35 


11.94 


12.40 


12.02 


28 


13.07 


12.77 


12.30 


12.85 


12.43 


29 


13.50 


13.24 


12.66 


13.33 


12.85 


30 


13.96 


13.73 


13.06 


13.81 


13.33 


31 


14.43 


14.25 


13.46 


14.36 


13.81 


32 


14.93 


14.79 


13.89 


14.90 


14.34 


33 


15.47 


15.36 


14.36 


15.51 


14.87 


34 


16.02 


15.95 


14.84 


16.12 


15.42 


35 


16.62 


16.57 


15.36 


16.76 


16.00 


36 


17.24 


17.25 


15.92 


17.47 


16.60 


37 


17.90 


17.94 


* 16.48 


18.20 


17.25 


38 


18.59 


18.71 


17.12 


18.98 


17.91 


39 


19.33 


19.51 


17.78 


19.78 


18.65 


40 


20.11 


20.36 


18.52 


20.68 


19.41 


41 


20.93 


21.28 


19.28 


21.60 


20.26 


42 


21.80 


22.22 


20.09 


22.59 


21.17 


43 


22.72 


23.27 


20.96 


23.61 


22.11 


44 


23.69 


24.35 


21.89 


24.71 


23.08 


45 


24.72 


25.48 


22.93 


25.89 


24.16 


46 


25.81 


26.73 


24.00 


27.16 


25.23 


47 


26J97 


28.03 


25.15 


28.52 


26.39 


48 , 


28.20 


29.43 


26.39 


29.94 


27.63 


49 


29.51 


30.93 


27.72 


31.47 


28.92 


50 


30.91 


32.51 


29.06 


33.12 


30.31 


51 


32.39 


34.21 


30.50 


34.85 


31.81 


52 


33.97 


36.05 


32.06 


36.67 


33.38 


53 


35.65 


37.99 


33.69 


38.64 


35.12 


54 


37.45 


40.03 


35.50 


40.72 


37.01 


55 


39.36 


42.18 


37.41 


42.91 


38.88 


56 


41.41 


44.46 


39.54 


45.22 


40.90 


57 


43.60 


46.86 


41.73 


47.67 


43.10 


58 


45.94 


49.49 


43.98 


50.27 


45.43 


59 


48.45 


52.20 


46.21 


52.95 


47.97 


60 


51.13 


55.08 


48.49 


55.88 


50.67 


61 


54.01 


58.16 


50.82 


59.00 


53.62 


62 


57.10 


61.44 


53.28 


62.34 


56.78 


63 


60.41 


64.95 


55.88 


65.81 


60.16 


64 


63.98 


68.72 


58.72 


69.65 


63.58 


65 


67.82 


72.65 


61.94 


73.65 


67.14 


66 


71.95 


76.88 


65.38 


77.95 


70.83 


67 


76.40 


81.44 


69.18 


82.60 


74.41 


68 


81.21 


86.23 


73.27 


87.64 


78.22 


69 


86.39 


91.41 


77.68 


93.12 


82.02 


70 


92.00 


97.04 


82.31 


99.09 


86.07 







NOTE. — Contributions to be paid annually in advance for the whole term of life and 
provide for death benefit only. 



126 

tained by the actuary; also rates according to the experience of those societies ad- 
mitting women only and of those societies admitting men and women and of those 
societies admitting men only. 

It will be observed that the rates of contribution according to the National Fra- 
ternal Congress Table are in excess of those deduced from the experience of the 
combined experience of the forty-three societies for ages below 36. The rates at 
age 36 are respectively $17.24 and $17.25 and above that age the rates according to 
the combined experience of the forty-three societies are slightly in excess of the Na- 
tional Fraternal Congress rates to age 50, varying from one cent annually at age 
36 to $1.60 at age 50. Above age 50 the excess in the rates for the combined experi- 
ence becomes larger as the age advances until at age 70 the level annual rate of the 
National Fraternal Congress Table is $92.00 and by the combined experience $97.04. 

It should be noted that the above rates are annual rates to be paid in advance 
and are upon the assumption of four per cent interest earned on accumulations. 
Rates payable monthly would be somewhat in excess of one-twelfth of the annual 
rates, due to the loss ol interest and also to the loss of monthly installments on ac- 
count of members who die and lapse before the end of the year. 

The totals show that the expected deaths by the National Fraternal Con- 
gress Table were 26,239; the actual being 95.75 per cent of the expected. The 
per cent exposed below age 50 was 82.90, while the per cent of deaths below age 50 
was 56.68. 

The expected deaths by the American Experience Table were 9,322 in excess of 
the actual deaths; the actual being 72.94 per cent of expected. It may be stated in 
passing that these figures certainly established the fact that the American Experience 
Table of Mortality could not be correctly designated as a "minimum" table for fra- 
ternal beneficiary societies. 

Your committee is of the opinion that the National Fraternal Congress Table 
of Mortality is sustained by the actual experience as an acceptable "minimum" 
table for fraternal societies where admission of members is confined to persons whose 
ages are not above age 50. Your committee is not prepared to say that rates of 
contribution deduced from the National Fraternal Congress Table would be inade- 
quate for persons admitted to ages 55 or even 60 if proper medical selection is exer- 
cised, because it is a fact that under proper medical examination the death rate during 
at least the first five years of membership for entrants between the ages of 50 and 60 
is below that which is assumed under the National Fraternal Congress Table. 

Your committee further desires to call attention to the fact that the great majority 
of the societies composing the Congress do not admit members above age 50, and 
consequently the experience which has been investigated has not been modified 
above age 55 by favoiable mortality resulting from the admission of new lives treshly 
selected by medical examination. The actuary is of the opinion that the higher death 
rate above age 53 is, in a measure, the result of the absence of new risks amongst the 
members above age 50. 

Your committee call attention to the fact thac the data we have compiled are 
such that from them "Select" and "Ultimate" tables can be readily made at any 
time. , 

The resolution contemplated a presentation by your committee of the experience 
of life companies, and an effort was made to secure data from companies in the 
United States and Canada. Courteous replies were received from 23 companies, 
acknowledging the importance of the work and expressing appreciation of the under- 
taking, but regretting inability to comply with the request for data on account of 
the very heavy demands for special information required by investigating commit- 
tees in New York, Wisconsin, Iowa, New Jersey and the Dominion of Canada. Your 
cemmittee submits a number of mortality tables which have been constructed from 
various experiences and may be of value for comparison. 

The actuary will supplement this report with some comments on tables and 
schedules of rates derived from the separate experiences, to which references have 
been made. The rates of contribution for societies admitting women only are below 
those given in the other schedules, which is largely due- to the fact, as your commit- 
tee is advised, of the lack of exposures at advanced ages to give a basis for a reliable 
table. Your committee submits two mortality tables for female lives as a better 
guide than the table which has been based upon the four women's societies that favored 
your committee with data. 



127 

Supplemental Report. 

Supplementary to the "Special Report" of the Committee on Statistics and the 
Good of the Orders the following notes were submitted by Mr. Landis: 

First, The experience of the 43 so cieties is for a single year of operation. Unless 
the selected year is a normal one, the results could not be accepted as reliable, If it 
were specially healthy or unhealthy obviously it would be unsuited as the basis for 
an investigation which aimed at average results. 

The year 1904 was selected because the conditions appeared normal in respect of 
mortality. There was some disturbance on account of readjustment of rates of 
contribution, causing an increase in lapse rates and somewhat increasing the death 
rate, especially at ages above 50 through loss of good lives. With these exceptions 
the year 1904 was an average year, and since there were nearly three million expos- 
ures, widely distributed throughout the United States, the experience must be ac- 
cepted as approximately representing past and present and forecasting future mor- 
tality conditions amongst insured lives in Fraternal Beneficiary Associations oper- 
ating along existing lines. 

Second. To what has been said by the committee in reference to the grading 
of the tables, it may be added that this investigation has disclosed conditions which 
have been found in so many others that a mere mention of them is sufficient. I 
refer to the feature of a higher death rate at the lowest admission ages than at ages 
from 25 to about 35, and the almost uniform ratios for the ten years 35 to 45. The 
unusual showing is the decrease in the increase of mortality for ages after 70. 

If the adjusted rates are to reflect actual conditions (as they should), these char- 
acteristics must remain, and to that end I made use of formulas, as explained by the 
committee. The modern and best thought amongst actuaries is in favor of such 
grading as will retain the true character of the original data, and to abandon those 
analytical methods which have made so many tables a mere fiction. 

As before stated, the only object was to smooth out the irregularities which are 
always present in vital statistics, without destroying the characteristic features of 
the experience. When the actual death rate at 20 is higher than at 30 (as is found in 
almost every investigation of insured lives) the adjusted table should retain that 
feature, and any grading which destroys it, results in a fiction, however much it may 
please the theorist who would confirm his ideal of a "Law of Mortality." 



128 
FORTY-THREE SOCIETIES. 













Unadjusted 


Adjusted 


Ages. 


Existing. 


Lapses. 


Deaths. 


Exposures. 


Death Rate 
per 1000. 


Death Rate 
per 1000. 


16 


295 

777 


39 
112 


..... 


167.0 
539.5 






17 




"i.*85" 


"4.*64" 


18 


13,001 


2,847 


30 


8,188.5 


3.66 


4.66 


19 


22,919 


7,195 


96 


20,691.0 


4.64 


4.68 


20 


30,451 


9,136 


139 


29,387.0 


4.73 


4.71 


21 


39,376 


10,541 


182 


37,455.5 


4.85 


4.73 


22 


46,295 


11,766 


192 


45,400.5 


4.23 


4.74 


23 


51,448 


12,087 


264 


51,067.0 


5.17 


4.71 


24 


58,476 


12,661 


266 


58,009.5 


4.59 


4.66 


25 


62,146 


12,587 


314 


62,341.0 


5.04 


4.59 


26 


65,979 


12,108 


292 


66,119.0 


4.42 


4.52 


27 


71,119 


12,081 


300 


71,162.5 


4.22 


4.47 


28 


76,251 


12,338 


334 


76,302.0 


4.38 


4.46 


29 


79,624 


11,822 


343 


79,672.5 


4.31 


4.50 


30 


81,801 


11,532 


365 


82,017.0 


4.45 


4.60 


31 


84,569 


11,387 


402 


85,236.5 


4.72 


4.73 


32 


86,700 


10,982 


432 


87,207.0 


4.95 


4.89 


33 


87,230 


10,312 


471 


87,739.0 


5.37 


5.05 


34 


92,725 


10,673 


497 


93,209.0 


5.33 


5.20 


35 


93,621 


10,342 


505 


94,418.0 


5.35 


5.33 


36 


93,117 


9,843 


501 


94,161.5 


5.32 


5.45 


37 


93,972 


9,689 


528 


95,103.5 


5.55 


5.56 


38 


93,945 


9,226 


548 


94,723.0 


5.79 


5.70 


39 


90,762 


8,641 


533 


91,630.0 


5.82 


5.86 


40 


90,414 


8,391 


541 


91,508.5 


5.91 


6.07 


41 


90,438 


8,199 


605 


91,958.5 


6.58 


6.33 


42 


93,203 


8,110 


613 


94,648.5 


6.48 


6.64 


43 


95,107 


7,870 


689 


96,482.5 


7.15 


6.98 


44 


95,515 


7,632 


673 


96,553.0 


6.97 


7.37 


45 


90,504 


7,291 


754 


92,383.0 


8.16 


7.79 . 


46 


84,683 


6,662 


735 


87,175.5 


8.43 


8.24 


47 


79,414 


5,821 


682 


81,458.0 


8.37 


8.73 


48 


72,740 


5,098 


731 


74,607.5 


9.80 


9.28 


49 


66,042 


4,594 


683 


67,717.0 


10.09 


9.92 


50 


59,284 


4,051 


614 


61,071.0 


10.05 


10.67 


51 


51,645 


3,445 


616 


53,662.0 


11.48 


11.55 


52 


45,285 


2,712 


583 


46,962.0 


12.41 


12.59 


53 


40,831 


2,330 


587 


42,348.0 


13.86 


13.80 


54 


36,839 


2,390 


579 


38,341.0 


15.10 


15.17 


55 


31,096 


2,164 


556 


32,664.5 


17.02 


16.71 


56 


26,397 


1,938 


502 


27,826.5 


18.04 


18.39 


57 


22,905 


1,645 


509 


24,219.0 


21.02 


20.18 


57 


20,555 


1,539 


465 


21,780.0 


21.45 


22.07 


58 


18,611 


1,410 


443 


19,747.5 


22.43 


24.07 


60 


16,761 


1,153 


529 


17,854.0 


29.63 


26.21 



129 
FORTY-THREE SOCIETIES.— Continued. 













Unadjusted 


Adjusted 


Ages. 


Existing. 


Lapses. 


Deaths. 


Exposures. 


Death Rate 
per 1000. 


Death Rate 
per 1000. 


61 


14,998 


1,063 


445 


15,968.0 


27.87 


28.53 


62 


13,482 


856 


460 


14,361.5 


32.03 


31.06 


63 


12,029 


826 


392 


12,830.5 


30.55 


33.88 


64 


10,453 


721 


423 


11,234.5 


37.65 


37.00 


65 


8,312 


597 


357 


8,965.5 


39.82 


40.40 


66 


7,066 


554 


347 


7,686.0 


45.15 


43.99 


67 


5,857 


528 


317 


6,435.0 


49.26 


47.70 


68 


4,864 


513 


290 


5,406.5 


53.64 


51.54 


69 


4,206 


449 


247 


4,676.0 


52.82 


55.76 


70 


3,652 


403 


250 


4,103.0 


60.93 


60.85 


71 


3,089 


388 


260 


3,543.0 


73.38 


67.22 


72 


2,654 


325 


214 


3,027.5 


70.69 


75.12 


73 


2,147 


228 


174 


2,436.0 


71.43 


84.07 


74 


1,753 


198 


172 


2,026.0 


84.90 


93.55 


75 


1,142 


149 


144 


1,360.5 


105.84 


102.55 


76 


826 


99 


115 


990.5 


116.10 


110.28 


77 


554 


69 


96 


684.5 


140.25 


115.98 


78 


418 


49 


72 


514.5 


139.94 


120.26 


79 


325 


27 


46 


384.0 


119.79 


123.62 


80 


200 


11 


22 


227.5 


96.70 


127.68 


81 


136 


8 


21 


161.0 


130.43 


133.48 


82 


81 


9 


13 


100.5 


129.35 


142.65 


83 


73 


3 


18 


90.5 


198.89 


155.47 


84 


16 


1 


2 


18.5 


108.11 


172.11 


85 


4 




3 


7.0 


428.57 


191.00 


86 


1 




1 


2.0 


500.00 


211.55 


87 


6 






6.0 




232.48 


88 


3 






3.0 




253.40 


89 


2 






2.0 




273.76 


90 


1 






1.0 




294.17 


91 












314.72 


92 












335.96 


93 












357.74 


94 












380.02 


95 












404.33 


96 












431.47 


97 












462.18 


98 












495.12 


99 












531.29 


100 












581.73 


101 












666.67 


102 












1,000.00 




2,843,218 


332,466 


25,125 


2,880,166.5 





130 
FORTY-THREE SOCIETIES. 





Unadjusted. 




Adjusted. 




Age. 












lx. 


dx. 


lx. 


dx. 


qx. 


px. 


17 


100,000 


184 


100,000 


464 


.00464 


.99536 


18 


99,816 


365 


99,536 


462 


.00466 


.99534 


19 


99,451 


461 


99,074 


464 


.00468 


.99532 


20 


98,990 


469 


98,610 


465 


.00471 


.99529 


21 


98,521 


477 


98,145 


464 


.00473 


.99527 


22 


98,044 


415 


97,681 


462 


.00474 


.99526 


23 


97,629 


504 


97,219 


458 


.00471 


.99529 


24 


97,125 


446 


96,761 


451 


.00466 


.99534 


25 


96,679 


487 


96,310 


443 


.00459 


.99541 


26 


96,192 


424 


95,867 


434 


.00452 


.99548 


27 


95,768 


405 


95,433 


427 


.00447 


.99553 


28 


95,363 


418 


95,006 


424 


.00446 


.99554 


29 


94,945 


411 


94,582 


426 


.00450 


.99550 


30 


94,534 


421 


94,156 


432 


.00460 


.99540 


31 


94,113 


443 


93,724 


444 


.00473 


.99527 


32 


93,670 


465 


93,280 


454 


.00489 


.99511 


33 


93,205 


501 


92,826 


469 


.00505 


.99495 


34 


92,704 


494 


92,357 


479 


.00520 


.99480 


35 


92,210 


493 


91,878 


490 


.00533 


.99467 


36 


91,717 


489 


91,388 


497 


.00545 


.99455 


37 


91,228 


507 


90,891 


505 


.00556 


.99444 


38 


90,721 


524 


90,386 


515 


.00570 


.99430 


39 


90,197 


524 


89,871 


526 


.00586 


.99414 


40 


89,673 


529 


89,345 


542 


.00607 


.99393 


41 


89,144 


588 


88,803 


562 


.00633 


.99367 


42 


88,556 


565 


88,241 


585 


.00664 


.99336 


43 


87,991 


638 


87,656 


612 


.00698 


.99302 


44 


87,353 


609 


87,044 


641 


.00737 


.99263 


45 


86,744 


708 


86,403 


674 


.00779 


.99221 


46 


86,036 


726 


85,729 


705 


.00824 


.99176 


47 


85,310 


714 


85,024 


743 


.00873 


.99127 


48 


84,596 


830 


84,281 


782 


.00928 


.99072 


49 


83,766 


844 


83,499 


829 


.00992 


.99008 


50 


82,922 


834 


82,670 


882 


.01067 


.98933 


51 


82,088 


941 


81,788 


945 


.01155 


.98845 


52 


81,147 


1,007 


80,843 


1,018 


.01259 


.98741 


53 


80,140 


1,110 


79,825 


1,100 


.01380 


.98620 


54 


79,030 


1,194 


78,725 


1,195 


.01517 


.98483 


55 


77,836 


1,326 


77,530 


1,296 


.01671 


.98329 


56 


76,510 


1,381 


76,234 


1,402 


.01839 


.98161 


57 


75,129 


1,579 


74,832 


1,509 


.02018 


.97982 


58 


73,550 


1,579 


73,323 


1,618 


.02207 


.97793 


59 


71,971 


1,614 


71,705 


1,726 


.02407 


.97593 


60 


70,357 


2,084 


69,979 


1,833 


.02621 


.97379 



131 
FORTY-THREE SOCIETIES.— Continued. 





Unadjusted. 




Adjusted. 




Age. 




























lx. 


dx. 


lx. 


dx. 


qx. 


px. 


61 


68,273 


1,903 


68,146 


1,944 


.02853 


.97147 


62 


66,370 


2,126 


66,202 


2,056 


.03106 


.96894 


63 


64,244 


1,962 


64,146 


2,173 


.03388 


.96612 


64 


62,282 


2,346 


61,973 


2,293 


.03700 


.96300 


65 


59,936 


2,387 


59,680 


2,511 


.04040 


.95960 


66 


57,549 


2,597 


57,269 


2,518 


.04399 


.95601 


67 


54,952 


2,708 


54,751 


2,612 


.04770 


.95230 


68 


52,244 


2,802 


52,139 


2,687 


.05154 


.94846 


69 


49,442 


2,611 


49,452 


2,758 


.05576 


.94424 


70 


46,831 


2,854 


46,694 


2,841 


.06085 


.93915 


71 


43,977 


3,227 


43,853 


2,948 


.06722 


.93278 


72 


40,750 


2,880 


40,905 


3,072 


.07512 


.92488 


73 


37,870 


2,706 


37,833 


3,181 


.08407 


.91593 


74 


35,164 


2,985 


34,652 


3,242 


.09355 


.90645 


75 


32,179 


3,406 


31,410 


3,221 


. 10255 


.89745 


76 


28,773 


3,340 


28,189 


3,109 


.11028 


.88972 


77 


25,433 


3,567 


25,080 


2,909 


.11598 


.88402 


78 


21,866 


3,060 


22,171 


2,666 


. 12026 


.87974 


79 


18,806 


2,630 


19,505 


2,412 


. 12362 


.87638 


80 


16,176 


1,224 


17,093 


2,182 


.12768 


.87232 


81 


14,952 


1,950 


14,911 


1,990 


.13348 


.86652 


82 


13,002 


1,682 


12,921 


1,843 


.14265 


.85735 


83 


11,320 


2,251 


11.078 


1,722 


.15547 


.84453 


84 


9,069 


4,447 


9,356 


1,611 


.17211 


.82789 


85 


4,622 


2,311 


7,745 


1,479 


.19100 


.80900 


86 


2,311 




6,266 


1,325 


.21155 


.78845 


87 






4,491 


1,149 


.23248 


.76752 


88 






3,792 


961 


.25340 


.74660 


89 






2,831 


775 


.27376 


.72624 


90 






2,056 


605 


.29417 


.70583 


91 






1,451 


457 


.31472 


.68528 


92 






994 


334 


.33596 


.66404 


93 






660 


236 


.35774 


.64226 


94 






424 


161 


.38002 


.61998 


95 






263 


106 


.40433 


.59567 


96 






157 


68 


.43147 


.56853 


97 






89 


41 


.46218 


.53782 


98 






48 


24 


.49512 


.50488 


99 






24 


13 


.53129 


.46871 


100 






11 


6 


.58173 


.41827 


101 






5 


3 


.66667 


.33333 


102 






2 


2 


1.00000 


.00000 




97,689 


100,000 





Note — lx = Number Living. 
dx = Number Dying. 



qx = Probability of Dying, 
px = Probability of Living. 



132 
FORTY-THREE SOCIETIES. 



Ages. 


Actual 
Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus. 


Accumulated 
Error. 


17 


1 


3 


2 




+ 2 


18 


30 


38 


8 




+ 10 


19 


96 


97 


1 




+11 


20 


139 


138 




1 


+10 


21 


182 


177 




5 


+ 5 


22 


192 


215 


23 




+28 


23 


264 


241 




23 


+ 5 


24 


266 


270 


4 




+ 9 


25 


314 


286 




28 


-19 


26 


292 


299 


7 




-12 


27 


300 


318 


18 




+ 6 


28 


334 


340 


6 




+12 


29 


343 


359 


16 




+28 


30 


365 


377 


12 




+40 


31 


402 


403 


1 




+41 


32 


432 


426 




6 


+35 


33 


471 


443 




28 


+ 7 


34 


497 


485 




12 


- 5 


35 


505 


503 




2 


- 7 


36 


501 


512 


11 




+ 4 


37 


528 


529 


1 




+ 5 


38 


548 


540 




8 


- 3 


39 


533 


537 


4 




+ 1 


40 


541 


556 


15 




+16 


41 


605 


582 




23 


- 7 


42 


613 


628 


15 




+ 8 


43 


689 


673 




16 


- 8 


44 


673 


712 


39 




+31 


45 


754 


719 




35 


- 4 


46 


735 


718 




17 


-21 


47 


682 


711 


29 




+ 8 


48 


731 


692 




39 


-31 


49 


683 


671 




12 


-43 


50 


614 


652 


38 




- 5 


51 


616 


620 


4 




- 1 


52 


583 


591 


8 




+ 7 


53 


587 


584 




3 


+ 4 


54 


579 


582 


3 




+ 7 


55 


556 


546 




10 


- 3 


56 


502 


512 


10 




+ 7 


57 


509 


489 




20 


-13 


58 


465 


478 


13 







59 


443 


475 


32 




+32 


60 


529 


468 




61 


-29 



133 
FORTY-THREE SOCIETIES.— Continued. 



Ages. 


Actual 
Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus. 


Accumulated 
Error. 


61 


445 


456 


11 




-18 


62 


460 


446 




14 


-32 


63 


392 


435 


43 




+ 11 


64 


423 


416 




7 


+ 4 


65 


357 


362 


5 




+ 9 


66 


347 


338 




9 





67 


317 


307 




10 


-10 


68 


290 


279 




11 


-21 


69 


247 


261 


14 




- 7 


70 


250 


250 






- 7 


71 


260 


238 




22 


-29 


72 


214 


227 


13 




-16 


73 


174 


205 


31 




+ 15 


74 


172 


190 


18 




+33 


75 


144 


140 




4 


+29 


76 


115 


109 




6 


+23 


77 


96 


79 




17 


+ 6 


78 


72 


62 




10 


- 4 


79 


46 


47 


1 




- 3 


80 


22 


29 


7 




+ 4 


81 


21 


21 






+ 4 


82 


13 


14 


1 




+ 5 


83 


18 


14 




4 


+ 1 


84 


2 


3 


1 




+ 2 


85 


3 


1 




2 





89 


1 


1 











25,125 


25,125 


465 


465 





134 

MEN. 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate 
Per 1000. 


Death Rate 
Per 1000. 


Living. 


Dying. 


16 


112.0 










17 


365.5 


2.74 


4.35 


100,000 


434 


18 


4,145.0 


4.58 


4.40 


99,566 


439 


19 


12,025.0 


4.99 


4.47 


99,127 


445 


20 


18,451.5 


5.20 


4.54 


98,682 


448 


21 


24,819.5 


4.43 


4.60 


98,234 


452 


22 


31,667.0 


4.23 


4.61 


97,782 


451 


23 


35,936.0 


4.98 


4.58 


97,331 


445 


24 


41,224.0 


4.37 


4.51 


96,886 


436 


25 


44,531.5 


4.85 


4.41 


96,450 


426 


26 


47,484.5 


4.17 


4.32 


96,024 


415 


27 


51,358.5 


4.05 


4.26 


95,609 


406 


28 


55,206.0 


4.18 


4.25 


95,203 


405 


29 


57,805.5 


4.26 


4.30 


94,798 


407 


30 


59,628.0 


4.11 


4.40 


94,391 


417 


31 


62,105.5 


4.23 


4.54 


93,974 


427 


32 


63,670.0 


5.04 


4.70 


93,547 


440 


33 


64,011.5 


5.37 


4.86 


93,107 


454 


34 


68,240.5 


5.06 


5.02 


92,653 


466 


35 


69,484.0 


5.20 


5.16 


92,187 


476 


36 


69,425.0 


5.06 


5.30 


91,711 


487 


37 


70,378.0 


5.44 


5.45 


91,224 


496 


38 


70,274.5 


5.49 


5.63 


90,728 


511 


39 


67,585.0 


5.80 


5.85 


90,217 


528 


40 


68,031.5 


6.03 


6.11 


89,689 


547 


41 


68,628.5 


6.70 


6.42 


89,142 


573 


42 


71,075.5 


6.63 


6.77 


88,569 


600 


43 


72,613.5 


7.19 


7.14 


87,969 


628 


44 


72,803.0 


7.20 


7.53 


87,341 


657 


45 


69,887.5 


8.16 


7.93 


86,684 


688 


46 


65,994.5 


8.83 


8.37 


85,996 


719 


47 


61,665.0 


8.64 


8.85 


85,277 


755 


48 


56,573.0 


9.49 


9.41 


84,522 


796 


49 


50,715.5 


10.08 


10.10 


83,726 


846 


50 


45,485.5 


10.44 


10.94 


82,880 


907 


51 


39,736.0 


12.06 


11.94 


81,973 


980 


52 


34,513.0 


12.84 


13.11 


80,993 


1,061 


53 


31,110.0 


13.92 


14.45 


79,932 


1,155 


54 


27,440.0 


16.44 


15.94 


78,777 


1,256 


55 


23,699.5 


18.14 


17.57 


77.521 


1,362 


56 


20,204.0 


19.01 


19.29 


76,159 


1,469 


57 


17,975.0 


22.48 


21.11 


74,690 


1,578 


58 


16,894.5 


21.90 


23.00 


73,112 


1,682 


59 


15,961 .0 


22.43 


25.00 


71,430 


1,787 


60 


14,773.5 


30.93 


27.11 


69,643 


1,888 



135 
MEN.— Continued. 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate 
Per 1000. 


Death Rate 
Per 1000. 


Living. 


Dying. 


61 


13,377.5 


28.93 


29.43 


67,755 


1,994 


62 


12,077.0 


33.45 


31.93 


65,761 


2,099 


63 


10,847.5 


31.43 


34.71 


63,662 


2,209 


64 


9,646.5 


37.84 


37.74 


61,453 


2,320 


65 


7,826.5 


40.25 


41.01 


59,133 


2,426 


66 


6,808.0 


46.42 


44.45 


56,707 


2,521 


67 


5,751.0 


49.73 


48.03 


54,186 


2,603 


68 


4,830.0 


54.45 


51.78 


51,583 


2,670 


69 


4,206.5 


52.78 


55.98 


48,913 


2,739 


70 


3,711.0 


60.09 


61.20 


46,174 


2,826 


71 


3,224.5 


73.81 


67.92 


43,348 


2,944 


72 


2,714.0 


71,85 


76.42 


40,404 


3,088 


73 


2,184.0 


74.18 


86.21 


37,316 


3,217 


74 


1,813.5 


89.33 


96.75 


34,099 


3,299 


75 


1,209.0 


107.53 


107.04 


30,800 


3.297 


76 


851.5 


117.44 


116.30 


27,503 


3,199 


77 


570.5 


154.24 


123.71 


24,304 


3,006 


78 


395.5 


144.12 


129.60 


21,298 


2,761 


79 


268.0 


138.06 


134.13 


; 18,537 


2,486 


80 


163.5 


97.86 


138.36 


16,051 


2,221 


81 


112.0 


133.93 


142.83 


13,830 


1,975 


82 


46.5 


150.54 


148.77 


11,855 


1,763 


83 


50.0 


200.00 


156.59 


10,091 


1,581 


84 


7.0 


130.29 


166.75 


8,511 


1,419 


85 


2.0 




178.37 


7,092 


1,265 


86 


1.0 




191.36 


5.827 


1,115 


87 


1.0 




205.12 


4,712 


967 


88 






219.72 


3,745 


822 


89 


1.0 




234.64 


2,923 


686 


90 


1.0 




250.26 


2,237 


560 


91 




i 


266.29 


1,677 


447 


92 






282.72 


1,230 


347 


93 






298.90 


883 


264 


94 






314.34 


619 


195 


95 






352.94 


424 


150 


96 






484.93 


274 


133 


97 






608.50 


141 


86 


98 






807.50 


55 


44 


99 






1,000.00 


11 


11 




2,128,410.0 


100,000 



136 
MEN. 



Ages. 


Actual Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus, 


Accumulated Error. 


17 


1 


2 


1 




+ 1 


18 


19 


18 




1 





19 


60 


54 




6 


- 6 


20 


96 


84 




12 


-18 


21 


110 


114 


4 




-14 


22 


134 


146 


12 




- 2 


23 


179 


165 




14 


-16 


24 


180 


186 


6 




-10 


25 


216 


196 




20 


-30 


26 


198 


205 


7 




-23 


27 


208 


219 


11 




-12 


28 


231 


235 


4 




- 8 


29 


246 


249 


3 




- 5 


30 


245 


263 


18 




+13 


31 


263 


282 


19 




+32 


32 


321 


299 




22 


+10 


33 


344 


311 




33 


-23 


34 


345 


342 




3 


-26 


35 


361 


359 




2 


-28 


36 


351 


368 


17 




-11 


37 


383 


383 






-11 


38 


386 


396 


10 




- 1 


39 


392 


395 


3 




+ 2 


40 


410 


411 


6 




+ 8 


41 


460 


441 




19 


-11 


42 


471 


481 


10 




- 1 


43 


522 


518 




4 


- 5 


44 


524 


548 


24 




+ 19 


45 


570 


554 




16 


+ 3 


46 


583 


552 




31 


-28 


47 


533 


546 


13 




-15 


48 


537 


532 




5 


-20 


49 


511 


512 


1 




-19 


50 


475 


497 


22 




+ 3 


51 


479 


474 




5 


- 2 


52 


443 


453 


10 




+ 8 


53 


433 


450 


17 




+25 


54 


451 


437 




14 


+11 


55 


430 


416 




14 


- 3 


56 


384 


390 


6 




+ 3 


57 


404 


380 




24 


-21 


58 


370 


389 


19 




- 2 


59 


358 


399 


41 




+39 


60 


457 


401 




56 


-17 



137 
MEN. — Continued. 



Ages. 


Actual Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus. 


Accumulated Error. 


61 


387 


394 


7 




-10 


62 


404 


386 




18 


-28 


63 


341 


377 


36 




+ 8 


64 


365 


364 




1 


+ 7 


65 


315 


321 


6 




+13 


66 


316 


303 




13 





67 


286 


276 




10 


-10 


68 


263 


256 




7 


-17 


69 


222 


235 


13 




- 4 


70 


223 


227 


4 







71 


238 


219 




19 


-19 


72 


195 


207 


12 




- 7 


73 


162 


188 


26 




+ 19 


74 


162 


175 


13 




+32 


75 


130 


129 




1 


+31 


76 


100 


99 




1 


+30 


77 


88 


71 




17 


+13 


78 


57 


51 




6 


+ 7 


79 


37 


36 




1 


+ 6 


80 


16 


23 


7 




+13 


81 


15 


16 


1 




+14 


82 


7 


7 






+14 


83 


10 


8 




2 


+12 


84 


1 


1 






+12 




19,414 


19,426 


409 


397 





138 
WOMEN. 



■ 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate 
Per 1000. 


Death Rate 
Per 1000. 


Living. 


Dying. 


16 


.5 










17 


64.0 


5.35 


5.43 


100,000 


543 


18 


1,139.0 


6.15 


5.41 


99,457 


538 


19 


3,176.0 


5.35 


5.40 


98,919 


534 


20 


4,162.5 


4.56 


5.39 


98,385 


531 


21 


5,060.5 


6.32 


5.42 


97,854 


530 


22 


5,570.0 


3.77 


5.46 


97,324 


532 


23 


6,648.5 


6.92 


5.49 


96,792 


531 


24 


7,562.0 


5.42 


5.49 


96,261 


528 


25 


8,474.0 


6.25 


5.48 


95,733 


526 


26 


8,926.5 


4.93 


5.46 


95,207 


520 


27 


9,716.0 


4.63 


5.47 


94,687 


518 


28 


10,484.0 


5.82 


5.51 


94,169 


519 


29 


11,038.0 


5.80 


5.60 


93,650 


524 


30 


11,451.5 


5.33 


5.70 


93,126 


530 


31 


11,768.5 


6.88 


5.80 


92,596 


538 


32 


11,976.0 


5.59 


5.88 


92,058 


541 


33 


12,367.0 


5.26 


5.93 


91,517 


542 


34 


12,964.0 


6.17 


5.94 


90,975 


541 


35 


13,050.0 


6.13 


5.93 


90,434 


536 


36 


12,786.5 


6.10 


5.93 


89,898 


532 


37 


12,791.5 


5.55 


5.93 


89,366 


530 


38 


12,765.0 


6.66 


5.95 


88,836 


528 


39 


12,561.5 


5.25 


6.01 


88,308 


531 


40 


12,223.5 


5.73 


6.08 


87,777 


534 


41 


12,012.5 


6.58 


6.14 


87,243 


535 


42 


11,737.0 


6.56 


6.22 


86,708 


539 


43 


11,845.0 


6.50 


6.32 


86,169 


544 


44 


11,501.5 


5.83 


6.44 


85,625 


552 


45 


10,844.5 


7.50 


6.61 


85,073 


563 


46 


10,046.5 


6.07 


6.90 


84,510 


583 


47 


9,170.0 


6.11 


7.36 


83,927 


618 


48 


8,190.5 


9.40 


7.97 


83,309 


665 


49 


7,655.0 


9.27 


8.66 


82,644 


716 


50 


6,484.5 


7.86 


9.38 


81,928 


768 


51 


5,462.0 


10.44 


10.07 


81,160 


818 


52 


4,629.5 


10.37 


10.61 


80,342 


852 


53 


3,933.5 


14.75 


11.08 


79,490 


881 


54 


3,602.0 


11.94 


11.63 


78,609 


932 


55 


2,731.5 


8.05 


12.58 


77,677 


960 


56 


2,473.5 


14.55 


14.17 


76,717 


1,088 


57 


1,919.5 


17.71 


16.49 


75,629 


1,247 


58 


1,388.5 


15.12 


19.35 


74,382 


1,440 


59 


987.0 


21.28 


22.36 


72,942 


1,630 


60 


668.5 


28.42 


25.13 


71,312 


1,792 



139 
WOMEN.— Continued. 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate 
Per 1000. 


Death Rate 
Per 1000. 


Living. 


Dying. 


61 


496.0 


30.24 


27.24 


69,520 


1,893 


62 


475.5 


35.75 


28.65 


67,627 


1,937 


63 


449.5 


24.47 


29.54 


65,690 


1,940 


64 


311.0 


25.72 


30.42 


63,750 


1,940 


65 


244.5 


32.72 


31.72 


61,810 


1,961 


66 


146.5 


6.83 


33.74 


59,849 


2,019 


67 


70.0 


28.57 


36.57 


57,830 


2,115 


68 


21.0 




40.10 


55,715 


2,234 


69 


1.0 




44.19 


53,481 


2,363 


70 






48.65 


51,118 


2,488 


71 


2.0 




53.38 


48,630 


2,596 


72 






58.38 


46,034 


2,687 


73 


1.0 




63.78 


43,347 


2,764 


74 






69.57 


40,583 


2,824 


75 


1.0 




75.74 


37,759 


2,860 


76 






82.31 


34,899 


2,872 


77 






89.30 


32,027 


2,860 


78 






96.71 


29,167 


2,821 


79 






104.55 


26,346 


2,754 


80 






112.83 


23,592 


2,662 


81 






121.56 


20,930 


2,544 


82 






130.74 


18,386 


2,404 


83 






140.39 


15,982 


2,244 


84 






150.51 


13,738 


2,067 


85 






161.12 


11,671 


1,881 


86 






172.24 


9,790 


1,686 


87 






183.88 


8,104 


1,490 


88 






196.06 


6,614 


1,297 


89 






208.79 


5,317 


1,110 


90 






222.08 


4,207 


934 


91 






235.96 


3,273 


773 


92 






250.44 


2,500 


626 


93 






276.20 


1,874 


517 


94 






309.45 


1,357 


420 


95 






348.77 


937 


327 


96 






412.92 


010 


252 


97 






504.89 


358 


181 


98 






634.68 


177 


112 


99 






813.56 


65 


53 


100 






1,000.00 


12 


12 




348,228.0 


100,000 



140 
WOMEN. 



Ages. 


Actual Deaths. 


Expected Deaths 
by Adjusted. 


Plus. 


Minus. 


Accumulated 
Error. 


18 


7 


6 




1 


- 1 


19 


17 


17 






- 1 


20 


19 


22 


3 




+ 2 


21 


32 


27 




5 


- 3 


22 


21 


30 


9 




+ 6 


23 


46 


37 




9 


- 3 


24 


41 


41 






- 3 


25 


53 


46 




7 


-10 


26 


44 


49 


5 




- 5 


27 


45 


53 


8 




+ 3 


28 


61 


58 




3 





29 


64 


62 




2 


- 2 


30 


61 


65 


4 




+ 2 


31 


81 


68 




13 


-11 


32 


67 


70 


3 




- 8 


33 


65 


73 


8 







34 


80 


77 




3 


- 3 


35 


80 i 


77 




3 


- 6 


36 


78 


76 




2 


- 8 


37 


71 


76 


5 




- 3 


38 


85 j 


76 




9 


-12 


39 


66 


76 


10 




- 2 


40 


70 


74 


4 




+ 2 


41 


79 


74 




5 


- 3 


42 


77 ! 


73 




4 


- 7 


43 


77 


75 




2 


- 9 


44 


67 


74 


7 




- 2 


45 


81 


71 




10 


-12 


46 


61 


69 


8 




- 4 


47 


56 


67 


11 




+ 7 


48 


77 


65 




12 


- 5 


49 


71 


66 




5 


-10 


50 


51 


61 


10 







51 


57 


55 




2 


- 2 


52 


48 


49 


1 




- 1 


53 


58 


44 




14 


-15 


54 


43 


42 




1 


-16 


55 


22 


34 


12 




- 4 


56 


36 


35 




1 


- 5 


57 


34 


32 




2 


- 7 


58 


21 


27 


6 




- 1 


59 


21 


22 


1 







60 


19 


17 




2 


- 2 


61 


15 


14 




1 


- 3 


62 


17 


14 




3 


- 6 


53 


11 


13 


2 




- 4 


64 


8 


9 


1 




- 3 


65 


8 


8 






- 3 


66 


1 


5 


4 






67 


2 


3 


1 




+ 1 
+ 2 














2,372 


2,374 


123 


121 





141 
MEN AND WOMEN. 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate 
Per 1000. 


Death Hate 
Per 1000. 


Living. 


Dying. 


16 


54.5 










17 


110.0 




4.23 


100,000 


423 


18 


2,904.5 


1.38 


4.21 


99,577 


418 


19 


5,490.0 


3.46 


4.25 


99,159 


422 


20 


6,773.0 


3.54 


4.33 


98,737 


426 


21 


7,575.5 


5.28 


4.44 


98,311 


436 


22 


8,163.5 


4.53 


4.56 


97,875 


448 


23 


8,482.5 


4.60 


4.67 


97,427 


454 


24 


9,223.5 


4.88 


4.71 


96,973 


457 


25 


9,335.5 


4.82 


4.69 


96,516 


452 


26 


9,708.0 


5.15 


4.62 


96,064 


444 


27 


10,088.0 


4.66 


4.53 


95,620 


432 


28 


10,612.0 


3.96 


4.46 


95,188 


425 


29 


10,829.0 


3.05 


4.44 


94,763 


420 


30 


10,937.5 


5.39 


4.50 


94,343 


425 


31 


11,362.5 


5.10 


4.66 


93,918 


438 


32 


11,561.0 


3.81 


4.90 


93,480 


457 


33 


11,360.5 


5.46 


5.19 


93,023 


483 


34 


12,004.5 


6.00 


5.47 


92,540 


506 


35 


11,884.0 


5.39 


5.72 


92,034 


526 


36 


11,950.0 . 


6.03 


5.90 


91,508 


540 


37 


11,934.0 


6.20 


5.99 


90,968 


545 


38 


11,683.5 


6.59 


6.01 


90,423 


544 


39 


11,483.5 


6.53 


6.02 


89,879 


540 


40 


11,253.5 


5.42 


6.06 


89,339 


542 


41 


11,317.5 


5.83 


6.19 


88,797 


550 


42 


11,836.0 


5.49 


6.46 


88,247 


569 


43 


12,024.0 


7.49 


6.88 


87,678 


604 


44 


12,248.5 


6.69 


7.42 


87,074 


645 


45 


11,651.0 


8.84 


8.03 


86,429 


694 


46 


11,134.5 


8.17 


8.63 


85,735 


739 


47 


10,623.0 


8.76 


9.18 


84,996 


781 


48 


9,844.0 


11.89 


9.65 


84,215 


812 


49 


9,346.5 


10.81 


10.06 


83,403 


839 


50 


9,101.0 


9.67 


10.47 


82,564 


864 


51 


8,464.0 


9.45 


10.98 


81,700 


897 


52 


7,819.5 


11.77 


11.67 


80,803 


943 


53 


7,304.5 


13.09 


12.59 


79,860 


1,005 


54 


7,299.0 


11.65 


13.72 


78,855 


1,082 


55 


6,233.5 


16.68 


14.95 


77,773 


1,162 


56 


5,149.0 


15.93 


16.21 


76,611 


1,242 


57 


4,324.5 


16.42 


17.45 


75,369 


1,316 


58 


3,497.0 


21.16 


18.66 


74,053 


1,382 


59 


2,799.5 


22.86 


20.00 


72,671 


1,453 


60 


2,412.0 


21.97 


21.58 


71,218 


1,536 



142 
MEN AND WOMEN.— Continued. 







Unadjusted 


Adjusted 






Ages. 


Exposures. 


Death Rate. 
Per 1000. 


Death Rate. 
Per 1000. 


Living. 


Dying. 


61 


2,094.5 


20.53 


23.57 


69,682 


1,643 


62 


1,809.0 


21.71 


26.11 


68,039 


1,776 


63 


1,533.5 


26.08 


29.35 


66,263 


1,945 


64 


1,277.0 


39.15 


33.34 


64,318 


2,145 


65 


894.5 


38.01 


37.94 


62,173 


2,359 


66 


731.5 


41.01 


42.66 


59,814 


2,552 


67 


614.0 


47.23 


47.11 


57,262 


2,698 


68 


555.5 


48.61 


50.94 


54,564 


2,779 


69 


468.5 


53.36 


54.06 


51,785 


2,800 


70 


392.0 


68.88 


56.74 


48,985 


2,780 


71 


316.5 


69.51 


59.53 


46,205 


2,751 


72 


313.5 


60.61 


62.79 


43,454 


2,728 


73 


251.0 


47.81 


66.74 


40,726 


2,718 


74 


212.5 


47.06 


71.02 


38,008 


2,699 


75 


150.5 


93.02 


75.55 


35,309 


2,668 


76 


139.0 


107.91 


80.46 


32,641 


2,627 


77 


114.0 


70.18 


85.96 


30,014 


2,579 


78 


119.0 


126.05 


92.47 


27,435 


2,537 


79 


116.0 


77.59 


100.89 


24,898 


2,512 


80 


64.0 


93.75 


111.82 


22,386 


2,504 


81 


49.0 


122.45 


125.65 


19,882 


2,498 


82 


54.0 


111.11 


142.34 


17,384 


2,474 


83 


40.5 


197.53 


161.20 


14,910 


2,403 


84 


11.5 


86.96 


181.49 


12,507 


2,270 


85 


5.0 


600.00 


202.16 


10,237 


2,070 


86 


1.0 


1,000.00 


222.33 


8,167 


1,815 


87 


5.0 




241.80 


6,352 


1,536 


88 


3.0 




261.11 


4,816 


1,257 


89 


1.0 




280.86 


3,559 


1,000 


90 






301.75 


2,559 


772 


91 






323.86 


1,787 


579 


92 






346.56 


1,208 


419 


93 






368.80 


789 


291 


94 






398.00 


498 


198 


95 






323.73 


300 


97 


96 






359.82 


203 


73 


97 






396.70 


130 


52 


98 






533.33 


78 


41 


99 






581.43 


37 


22 


100 






666.67 


15 


10 


101 






1,000.00 


5 


5 




403,528.5 


100,000 



14.3 







MEN AND WOMEN. 






Ages. 


Actual Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus. 


Accumulated Error. 


18 


4 


12 


8 




+ 8 


19 


19 


23 


4 




+ 12 


20 


24 


29 


5 




+ 17 


21 


40 


34 




6 


+ 11 


22 


37 


37 






+ 11 


23 


39 


40 


1 




+ 12 


24 


45 


43 




2 


+ 10 


25 


45 


44 




1 


+ 9 


26 


50 


45 




5 


+ 4 


27 


47 


46 




1 


+ 3 


28 


42 


47 


5 




+ 8 


29 


33 


48 


15 




+28 


30 


59 


49 




10 


+13 


31 


58 


53 




5 


+ 8 


32 


44 


57 


13 




+21 


33 


62 


59 




3 


+18 


34 


72 


66 




6 


+ 12 


35 


64 


68 


4 




+16 


36 


72 


70 




2 


+ 14 


37 


74 


71 




3 


+ 11 


38 


77 


70 




7 


+ 4 


39 


75 


69 




6 


- 2 


40 


61 


68 


7 




+ 5 


41 


66 


70 


4 




+ 9 


42 


65 


76 


11 




+20 


43 


90 


82 




8 


+ 12 


44 


82 


91 


9 




+21 


45 


103 


94 




9 


+ 12 


46 


91 


96 


5 




- +17 ■ 


47 


93 


97 


4 




+21 


48 


117 


95 




22 


- 1 


49 


101 


94 




7 


- 8 


50 


88 


95 


7 




- 1 


51 


80 


93 


13 




+12 


52 


92 


91 




1 


+11 


53 


96 


92 




4 


+ 7 


54 


85 


100 


15 




+22 


55 


104 


93 




11 


+ 11 


56 


82 


83 


1 




+12 


57 


71 


75 


4 




+ 16 


58 


74 


65 




9 


+ 7 


59 


64 


56 




8 


- 1 


60 


53 


52 




1 


- 2 



144 



MEN AND WOMEN.— Continued. 



Ages. 


Actual Deaths. 


Expected Deaths by 
Adjusted. 


Plus. 


Minus. 


Accumulated Error. 


61 


43 


49 


6 




+ 4 


62 


39 


47 


8 




+12 


63 


40 


45 


5 




+17 


64 


50 


43 




7 


+10 


65 


34 


34 






+10 


66 


30 


31 


1 




+11 


67 


29 


29 






+11 


68 


27 


28 


1 




+12 


69 


25 


25 






+12 


70 


27 


42 




5 


+ 7 


71 


22 


19 




3 


+ 4 


72 


19 


20 


1 




+ 5 


73 


12 


17 


5 




+10 


74 


10 


15 


5 




+15 


75 


14 


11 




3 


+12 


76 


15 


11 




4 


+ 8 


77 


8 


10 


2 




+10 


78 


15 


11 




4 


+ 6 


79 


9 


12 


3 




+ 9 


80 


6 


7 


1 




+10 


81 


6 


6 






+10 


82 


6 


8 


2 




+12 


83 


8 


7 




1 


+11 


84 


1 


2 


1 




+12 


85 


3 


1 




2 


+10 


86 


1 


1 






+10 




3,339 


3,349 


176 


166 





DEATH RATES PER 1000. 





MALES AND MIXED LIVES. 


FEMALES 


Age. 


.a 

M 

3 


a 


is 


3 


a 
o . 

O 4) 

2 


ft 


i 


-a 

h 


a 

• -< aS 
aS a> 






IB 


11 


cS 

p 

as 
O 


Si 


a> a 


'5 




0Q-— 

fc as 


11 


17 


3.75 
3.83 
3.92 
4.04 


"4.28' 


3.38 
3.48 
3.49 
3.48 






7.69 
7.73 

7.77 
7.81 


4.64 
4.66 
4.68 
4.71 


6.55 

7.18 
7.86 
8.56 




18 








19 








20 


"4.63* 


"5.06' 


"i'.n 


21 


4.16 


4.27 


3.40 


4.67 


5.04 


7.86 


4.73 


8.79 


4.73 


22 


4,31 


4.25 


3.44 


4.71 


5.07 


7.91 


4.74 


9.00 


4.77 


23 


4.46 


4.25 


3.46 


4.75 


5.11 


7.96 


4.71 


9.21 


4.83 


24 


4.63 


4.25 


3.47 


4.80 


5.15 


8.01 


4.66 


9.41 


4.90 


25 


4.81 


4.26 


3.54 


4.86 


5.20 


8.07 


4.59 


9.61 


4.99 


26 


5.00 


4.28 


3.67 


4.92 


5.26 


8.13 


4.52 


9.80 


5.10 


27 


5.23 


4.32 


3.84 


4.99 


5.32 


8.20 


4.47 


10.00 


5.33 


28 


5.44 


4.37 


3.94 


5.06 


5.39 


8.26 


4.46 


10.19 


5.35 


29 


5.69 


4.44 


4.18 


5.14 


5.47 


8.35 


4.50 


10.38 


5.50 


30 


5.95 


4.53 


4.41 


5.24 


5.55 


8.43 


4.60 


10.57 


5.66 


31 


6.20 


4.64 


4.71 


5.34 


5.65 


8.51 


4.73 


10.76 


5.82 


32 


6.48 


4.77 


4.91 


5.45 


5.75 


8.61 


4.89 


10.96 


6.00 


33 


6.77 


4.92 


5.25 


5.57 


5.87 


8.72 


5.05 


11.16 


6.18 


34 


7.06 


5.10 


5.49 


5.70 


6.00 


8.83 


5.20 


11.37 


6.37 


35 


7.38 


5.29 


5.68 


5.85 


6.15 


8.95 


5.33 


11.58 


6.56 


36 


7.71 


5.52 


5.83 


6.01 


6.31 


9.09 


5.45 


11.80 


6.74 


37 


8.04 


5.78 


6.09 


6.19 


6.49 


9.23 


5.56 


12.03 


6.93 


38 


8.38 


6.07 


6.28 


6.39 


6.70 


9.41 


5.70 


12.26 


7.12 


39 


8.77 


6.39 


6.62 


6.61 


6.92 


9.59 


5.86 


12.51 


7.31 


40 


9.15 


6.74 


7.02 


6.85 


7.17 


9.79 


6.07 


12.77 


7.49 


41 


9.56 


7.13 


7.47 


7.12 


7.45 


10.01 


6.33 


13.04 


7.68 


42 


10.01 


7.56 


7.91 


7.41 


7.77 


10.25 


6.64 


13.32 


7.86 


43 


10.48 


8.04 


8.38 


7.74 


8.11 


10.52 


6.98 


13.62 


8.05 


44 


10.99 


8.56 


8.80 


8.09 


8.48 


10.83 


7.37 


13.94 


8.25 


45 


11.53 


9.13 


9.20 


8.48 


8.87 


11.16 


7.79 


14.27 


8.46 


46 


12.13 


9.75 


9.59 


8.92 


9.29 


11.56 


8.24 


14.62 


8.69 


47 


12.77 


10.43 


10.06 


9.40 


9.75 


12.00 


8.73 


14.98 


8.94 


48 


13.45 


11.17 


10.55 


9.92 


10.27 


12.51 


9.28 


15.37 


9.22 


49 


14.22 


11.98 


11.03 


10.50 


10.82 


13.11 


9.92 


15.78 


9.55 


50 


15.04 


12.87 


11.50 


11.14 


11.44 


13.78 


10.67 


16.21 


9.92 


51 


15.95 


13.84 


12.08 


11.85 


12.15 


14.54 


11.55 


16.66 


10.35 


52 


16.93 


14.89 


12.54 


12.63 


12.90 


15.39 


12.59 


17.14 


10.86 


53 


17.99 


16.04 


12.99 


13.48 


13.75 


16.33 


13.80 


17.64 


11.44 


54 


19.18 


17.30 


13.58 


14.43 


14.68 


17.40 


15.17 


19.67 


12.13 


55 


20.54 


18.67 


14.28 


15.47 


15.71 


18.57 


16.71 


20.98 


12.92 


56 


21.84 


20.16 


15.15 


16.61 


16.86 


19.89 


18.39 


22.34 


13.94 


57 


23.38 


21.79 


16.16 


17.87 


18.12 


21.34 


20.18 


23.79 


14.90 


58 


25.05 


23.56 


17.36 


19.26 


19.50 


22.94 


22.07 


25.34 


16.12 


59 


26.89 


25.50 


18.63 


20.79 


21.05 


24.72 


24.07 


27.02 


17.50 


60 


28.87 


27.60 


19.94 


22.48 


22.75 


26.69 


26.21 


28.85 


19.08 


61 


31.05 


29.90 


21.47 


24.34 


24.64 


28.89 


28.53 


30.86 


20.86 


62 


33.44 


32.40 


23.31 


26.38 


26.72 


31.29 


31.06 


33.07 


22.86 



DEATH RATE PER 1000.— Continued. 









MALES 








FEMALES 


Age. 


-a 
.2 

15) ' 
a 

W 

CD 03 


d 

c3 


m 

a . 

o3 CJ 

o3 a 

&-..CD 
2j OJ 

<** 


03 
03 

- a ■ 

03 
O 


o . 

"03 ^ 


<D 

'fi » 

, OJ CJ 

; Q.2S 


to 

.2 

'o 
o 

: XJ1 

CO 


.3 . 

■S3 

£ c3 
03 H 


a 

03 
o3 a> 

c ~ 


63 
64 
65. 


36.03 

38.86 
41.96 


35.13 

38.10 
41.33 


26.07 
29.37 
33.40 


28.63 
31.10 
33.82 


29.03 
31.57 
34.39 


33.94 
36.87 
40.13 


33.88 
37.00 
40.40 


35.50 
38.18 

41.12 


25.09 

27.58 
20.34 


66 
67 
68 
69 
70 


45.32 
49.00 
52.99 
57.35 
62f07 


44.84 
48.66 
51.81 
57.32 
62.22 


37.23 
42.13 
44.67 
47.31 
50.06 


36.81 
40.10 
43.71 
47.68 
52.04 


37.52 
40.96 
44.78 

48.98 
53.65 


43.71 
47.65 
52.00 
56.76 
61.99 


43.99 
47.70 
51.54 
55.76 
60 85 


44.35 
47.90 
51.77 
55.99 
60.59 


33.38 
36.72 
40.37 
44.35 
48.67 


71 
72 
73 
74 
75 


67.23 

72.81 
78.92 
85.48 
92.64 


67.52 
73.27 
79.50 
86.23 
93.51 


53.38 
53.04 

57.82 
63.14 
66.33 


56.83 
62.07 
67.83 
74.13 
81.04 


58.81 
64.49 
70.81 

77.78 
85.48 


67.67 
73.73 
80.18 
87.03 
94.37 


67.22 
75.12 
84.07 
93.55 
102.55 


65 56 
70.95 
76.75 

82.98 
89.67 


53.34 
58.36 
63.76 
69.55 
75.72 


76 

77 
78 
79 
80 


100.43 
108.82 
117.95 
127.82 
138.44 


101.37 
109.85 
118.97 
128.79 
139.34 


72.15 

87.34 

100.16 

114.31 

136.31 


88.60 

96.86 

105.89 

115.73 

126.47 


93.99 
103.40 
113.84 
125.35 
138.09 


102.31 
111.06 
120.83 
131.73 
144.47 


110.28 
115.98 
120.26 
123.62 
127.68 


96.81 
104.43 
112.53 
121.11 
130.19 


82.30 

89.29 

96.70 

104.54 

112.82 


81 

82 
83 
84 
85 


150.00 
162.40 
175.73 
190.14 
205.69 


150.66 
162.78 
175.75 
189.60 
204.35 


158.20 
172.21 
187.25 
202.98 
212.21 


138.16 
150.87 
164.68 
179.64 
195.83 


152.20 
167.77 
184.96 
204.04 
225.08 


158.61 
174.30 
191.56 
211.36 
235.55 


133.48 
142.65 
155.47 
172.11 
191.00 


139.77 
149.85 
160.44 
171.53 
183.12 


121.55 
130.73 
140.38 
150.50 
161.12 


86 
87 
88 
89 
90 


222.13 
240.01 

258.87 
278.81 
300.75 


220.05 
236.72 
254.38 
273.05 
292.73 


219.76 
231.99 
246.61 
262.89 
283.02 


213.32 
232.17 
252.43 
274.16 
297.39 


248.35 
274.15 
302.57 
334.18 
368.79 


265.68 
303.02 
346.69 
395.86 
454.55 


211.55 
232.48 
253.40 
273.76 
294.17 


195.20 
207.77 
220.81 
234.33 
248.30 


172.24 
183.87 
196.04 
208.76 
222.04 


91 
92 
93 
94 
95 


322.58 
347.88 
371.20 
400.00 
424.73 


313.43 
335.14 
357.85 
381.52 
406.12 


312.58 
352.94 
406.93 
484.19 
608.49 


322.15 
348.45 
376.27 
405.58 
436.31 


407.67 
449.75 
498.45 
549.38 
602.74 


532.47 
634.26 
734.18 
857.14 
1000.00 


314.72 
335.96 
357.74 
380.02 
404.33 


262.71 
277.54 
292.78 
308.40 
324.37 


235.90 
250.37 
265.46 
281.18 
297.57 


06 
97 
98 
99 


457.94 
482.76 
500.00 
533.33 
571.43 

666.67 
1000.00 


431.60 

457.88 
484.88 
512.51 
540.64 


867.47 
1000.00 


468.37 
501.61 
535.87 
570.93 
606.53 

642.38 
1000.00 


655.17 

700.00 

1000.00 




431.47 
462.18 
495.12 
531.29 
581.73 

666.67 
1000.00 


340.69 
357.31 
374.21 
391.36 
408.74 

426.30 
444.02 
461.86 
479.79 

497.78 

515.78 
533.76 

cki an 


314.63 
332.38 
350.83 
369.99 


100 






389.87 


101 








102 












103 












104 


















105 


















106 


















107 


















mo 



















147 

APPLICATION OF ACTUARIAL PRINCIPLES. 

Within the last ten years the fraternal beneficiary societies generally have followed 
actuarial advice in making readjustments, where the management could control the 
situation. Many times expert assistance was received by the executives and rejected 
by the representatives of the members. Sometimes officials have gotten "cold feet," in 
view of possible defeat for reelection and forgot the actuary and his advice. 

But the general situation is very encouraging, and it is a personal satisfaction to 
testify to the earnest solicitude of fraternal officials for solvency and permanency of 
their societies. 

To this end the employment of actuaries is the rule, rather than the exception, and 
it is pleasant to note that where there was one available ten years ago, now there 
are a score or more offering their services as experts. 

If the rate of mortality were uniform at all periods of life, fraternal society finances 
would be a very simple matter, and the original equal levy plan would suffice for the 
perpetuation of the organizations. 

However, the rate of mortality increases with the age of the individual, and there- 
fore, to have a level contribution rate, with a uniform number of assessments each 
year, it is necessary to charge more than sufficient to meet the current death claims in 
the early years and accumulate the excess of contributions against the period when the 
annual claims will, by reason of increasing age, exceed the annual contribution. 

Tq fix the contribution at a rate which will be adequate to provide for future 
claims matured from year to year to the end of the longest life, without making the 
rate prohibitive, it is necessary to take advantage of interest increment. 

In Exhibit i, demonstrating the. method of computing level contribution rates, it 
was shown that $92,215,000 of claims, maturing year to year from entry age 35 to the 
limiting age of 99, could be provided for with a present sum at age 35 of $27,818,663.44 
improved at 4 per cent interest compounded annually. In other words, the single con- 
tribution as a principal sum would provide for $27,818,663.44 and the interest would 
provide for $64,396,336.56 of the total of $92,215,000 in claims — more than two-thirds 
paid from interest earning on the principal, after paying the yearly instalments of 
claims. 

As elsewhere shown, without the aid of interest, it would require an average annual 
contribution of $29.11, while with the 4 per cent interest increment, the annual level 
contribution is $16.62 at age of entry, 35. 

The effect of interest is not so marked in connection with the annual as with 
the single premium, because of the larger principal to be improved in the latter case. 

The fact to be impressed is that, without the interest factor level contribution rates 
would be unnecessarily heavy. To introduce this factor involves a second complica- 
tion to that of dealing with the increasing cost of insurance by virtue of increasing 
age. 

It is a common sense! observation to assert that it requires some one especially 
, qualified to compute and apply adequate and satisfactory rates of contribution. 

I have repeatedly remarked that before there can be any application of actuarial 
principles, and before computations can be commenced, there must be an estimate 
of the amount of yearly instalments of claims that will in the future be made by the 
members upon the funds. 

The only basis for such an estimate is past experience, either of the society in 
question or of other societies similarly situated, or similarly constituted to the partic- 
\ ular society for which a scale of rates is desired. 



148 



30*1 




This diagram is presented for 
the lesson that may be learned 
from it. 

It suited the purpose for 
which this table was con- 
structed to reproduce the actual 
experience, however erratic, and 
no criticism is intended when I 
say that it would be unsuited as 
a basis for the estimate of 
future claims, or for the com- 
putation of level contribution 
rates to provide for future 
claims. 

This would be a case where 
the experience of the particular 
society would not yield data for 
a satisfactory Mortality Table, 
in its entirety, and when it 
would be advisable to employ 
some standard table (such as 
the National Fraternal Con- 
gress Table in this case), with an 
assumed mortality approximat- 
ing actual experience at the ages 
where there were insufficient ex- 
posures to give reliable results. 



irtb 



GRADUATION 

This diagram is given 
as a second illustration of 
the Mortality Curve re- 
sulting from the gradu- 
ation of irregular death 
ratios. The original data 
was taken from the ex- 
perience of a society which 
had comparatively few 
exposures and deaths 
above the age of 65. 
The dotted line rep- 
resents the Mortality 
Curve projected upon 
other experience. A 
twenty-one term sum- 
mation formula was em- 
ployed for the graduation. 




70 72 74 78 78 80 8X 84 ao 86 90 



150 

The Mortality Table. 

The construction of a mortality table from original data should always be en- 
trusted to a competent actuary. 

It is not the present purpose to go into detail concerning the preparation of the 
data and their subsequent treatment. 

In 1906 I made a report to the Committee on Statistics and Good of the Orders 
of the National Fraternal Congress, and I have reproduced the Committee's report 
to the Congress, which contains eight separate mortality tables, four of them unad- 
justed and four graded. The tests of the graduations are also given. 

It would fill a book to enter into an explanation of the proper method of transcrib- 
ing the data from the records, and of their treatment before the unadjusted tables 
can be secured, and the graduation so as to correctly reflect the actual mortality ex- 
perience. 

I content myself with a reference to the report to the National Fraternal Congress 
in 1906, and with a diagram showing the mortality curves of the American Experience 
and National Fraternal Congress Mortality Tables, together with a graphic representa- 
tion of the unadjusted and adjusted Mortality Tables, according to the experience of 
the Pacific Jurisdiction of the Woodmen of the World. 

I had nothing to do with the graduation of the unadjusted ratios, and present the 
diagram because of the unusual character of the mortality curve. Ordinarily a reliable 
experience would produce a curve similar to that of the American Experience Table 
or the National Fraternal Congress Table. 

The purpose of a graduation is to smooth out the irregularities of the original 
ratios, and to do this the line representing 1 the graduation should cut the irregular 
line, representing the unadjusted ratios, so that equal parts should be presented above 
and below the graphically illustrated mortality curve. The graduation of the W. O. 
W. Pacific Jurisdiction experience appears to follow this rule, and yet the falling 
away from the Congress Table after - age 64 would indicate a paucity of exposures 
and an unreliable experience at the advanced ages. The violent fluctuations from very 
high to very low death rates at ages 66 to 70 bear out the assumption of unreliability 
of the experience at the advanced ages. 

EXPLANATION OF COMMUTATION COLUMNS. 

The following comprehensive explanation was prepared by Dr. George E. West, for 
the 1902 edition of "Life Insurance Premiums — How Computed, Tested, and Valued." 
I reproduce it in memory of a dear friend, and for the reason that it is unequalled as a 
brief and lucid exposition of a technical subject. Later on I attempt to give a more 
extended, if not a plainer, discussion of commutation columns and the arithmetical pro- 
cess of computing contribution rates: 

The methods of obtaining the data from which a mortality table is constructed 
are so well understood that a description thereof would probably be superfluous. 
The actual graduation of a table is too technical a process for popular exposition. 
It may be best, therefore, to take the table for granted, and to confine our attention 
to a description of its main features, and an explanation of a few of its principal uses. 
It is advisable to premise that a mortality table does not represent any society — past, 
present, or future — for which reason averages of the ratios at various ages are of no 
practical utility. What it does represent is the average mortality experience of a 
certain number of individuals taken at the initial age and kept under observation 
during their respective lives. Any age subsequent to the first may be made the 
initial age by cutting out the preceding portion of the table. 

The first column of the table contains in serial order the years of age from the 
earliest selected to the assumed limit of human life. The second column, designated 



151 

by the letter "1," the initial of the word "living," contains the survivors at each 
attained age of the original entrants, the number of which latter, known as the radix 
of the table, being placed opposite the initial age. The survivors, at any particular 
age, are indicated by the column symbol with the appropriate suffix; thus, l 2 o, I30, 
l 4 o, express the numbers surviving at ages 20, 30, and 40, respectively. When a 
general symbol is desired, it is customary to employ l x , in which x may have every 
value successively in the age column. 

Next to the "1" is usually placed the "d" column, "d" being the initial letter of 
the word "dying." As before, suffixes are employed to secure definiteness; thus, 
d 20 indicates the tabular number dying between ages 20 and 21. The general symbol 
is d x . It is obvious that — 

I20 — d 2 o=l2i, whence d 2 o =120 — 121. Generally, d x =l x — l x+l . 

The initial letter of the word "probability," "p," heads the column showing the 
probability of living at least one year at each age. The probability of surviving from 
age 20 to age 21 is expressed by P20; the general symbol is p x . As of l x persons who 
attain age x, l x+i will survive to age x + 1, it is evident that — 

px=lx+i-7-lx. 

The probability of dying within a year at any age is indicated by the letter "q," 
the initial of the word "quotient," suffixes being employed for the usual purpose. 
Of l x persons living at age x, d x die within a year; therefore — 



d x l x — l x +1 _ ., l x +i 

= lx~ lx lx : 



■1-p, 



This relation may be otherwise obtained. Certainty is designated by 1, and it is 
certain that a person will either survive or perish during the year; hence — 

px+q x = l, or q x = l — p x , as before. 

The respective probabilities of surviving and dying during the second year are de- 
noted by the symbols 2 p x and 2 q x , and, generally, during the nth year, by n p x and n q*. 
It is evident that — 

2px = px Px+l, 

that 3Px=2Px Px+2=Px Px+l Px+2, 

and, generally, that nPx = Pxpx+i p x+n -i. 

Similarly, 2q x =Px qx+i, 3qx=2Px q x +2 = Px px+i qx+2, 

and, generally, n qx = Px Px+i. • • • Px+n-2 q x +n-i. 

j Therefore, nPx+nqx = (px+n-i+qx+n-i = l)(p x Px+i Px+n-2) =n-ip x . 

The present value of a dollar, due one year hence, is denoted by the letter "v," 
the initial of the word "value;" v 2 represents the value of a dollar due two years 
I hence, and, generally, v x symbolizes the value of a dollar due x years hence. 

In insurance calculations it is commonly assumed that premiums are payable 
1 annually in advance, and claims at the end of the year. Starting at age x, each 
I member exposes the society during the first year to a risk of q x . As claims are not 

I payable till the end of the year, the value of the risk at the beginning is vq x =-p 

During the second year the risk is 2 q x , and its value is — 

2 2 2 k+i w^x+i y2 dx+i. 
v 2 2 q x =v 2 p x q x+ i=v 2 -: — X] = ; 

1 X lx+1 lx 

Similarly, the risk during the nth year is n q x , and its value is — 

v n d x+n -i 
v n n q x = ] 

Ax 

The value of the combined risk for any number of years is, therefore — 

, 2 I3 , _ vd x +v 2 d x+ i+v 3 dx+2-f* ' ' +v n d x+n _i 

vq x + v 2 2 q x + v 3 3 qx + ' + v n n q x = ; — 

lx 



152 



If in this formula n is given such a value that x+n — 1 becomes the last age in the 
mortality table, the complete expression gives the value of an insurance of one dollar 
for the whole of life, the symbol for which is A x . For convenience only, it is customary 
to multiply both numerator and denominator of the fraction by v x , so that we have — 

v x+l dx+v x+2 dx+1 + + V*+*d x+n _ 1 

From inspection, it is evident that every term in the numerator of the second mem- 
ber of this equation is of the same form — that is, by giving x successive values from 
x to x+n — 1, we get the successive terms. If then, we write v** * d x = C x , v x+2 d x +i 
will equal C x+ i, etc., whence — 

A _ C x -f-C x+ i+C x+ 2 + +C x + n -l 

Ax _ __ 

If, now, we sum C x , beginning at the highest age, and write the result, M x , the equa- 
tion becomes A x = — *-. A x is the net single premium for a whole life assurance of 
v x l x 

one dollar, issued at age x. 

As annual premiums are payable in advance, the first is certain and immediate, 
and hence has the full value, viz., P x . The probability that the second will be paid 
is p x , and the time of payment is one year hence; therefore, the value of the premium 
is — 

Pr> lx + 1 

x Vp x = P x V. — r— 
lx 

The value of the third premium is — 

P„ t-> 9 l X +l w lx + 2 !-) Jx + 2 
x V 2 2 Px = Px V 2 — r— X; = PxV 2 -^ 

lx lx + 1 Ix 

Similarly, the value of the nth premium is — 

PxV-- 1 n _ lPx = P x v--it^- 1 

*x 

The value of the entire series of premiums is, obviously — 

P *( 1 .+Tr+ I ir ! + + vn ~ 1 , 1 ; + -' )= 

p Ix+Vls + 1+V 2 lx+2+ +V-' lx+n-1 

lx 17 

Multiplying both numerator and denominator by v x the expression becomes — 

p v* U+v*-' l, + i+v*n l, +> + +y*+°-' l x+n _ t 

*' v* l x 

If n be given such a value as to make x+n— 1 the last age in the mortality table, the 
formula expresses the combined value of the premiums payable during life. From 
an inspection of the numerator of the fraction, it is evident that the successive terms 
are alike as to form, so that each can be formed from the preceding one by an increase 
of one in the value of x. If then, we write v x l x = D x , the formula becomes — 

p Dx + Dx + l + Dx+2+ +Dx+n-l 

Summing D x , beginning at the highest age, and writing the result as N x , the com- 
bined value of the premiums may be expressed as — 

Fx D, 



153 

This must be equal to the value of the assurance which has already been found to be 

_ or _ Wnting- 

p Nx_M* 
X D X D,' 

it follows that — 

^ X ~N X 

As P x is payable yearly during life, it is similar to a life annuity, of which the first 
payment is due. Therefore, the value of a life annuity due of P x is Px - ^, whence 

the value of a like annuity of one dollar is equal to =r-^» This value is denoted by a x . 

D x 

Immediately after the first payment of an annuity due, it becomes an ordinary or 
immediate annuity, of which the first payment will be due a year hence. Expressing 
this value by a x , it follows that — 

a x =a x — 1. 

It is customary in England to arrange the commutation columns so as to facilitate the 

N 
calculation of a x . In other words, N x is the summation of D x+i , so that a* =-pr^, whereas 

L) x 

by the American form of table, a x = * + * . 

L*x 

The calculation of varying annuities, assurances, and premiums is much facilitated 
by summations of the M and N columns, producing the R and S columns, respectively. 
Of the six columns heretofore described, the usefulness is by no means equal. 
Although C is the basis of M, it is almost never directly involved in computations, 
and is, consequently, seldom tabulated. On the other hand, the use of S is limited 
to a class of obligations with which fraternal orders are not concerned. Orders which 
scale certificates for a number of years are about the only ones requiring the R column. 
There remain, then, three columns, D, N, and M, which may be regarded as indis- 
pensable. 

As already shown — 

d x =l x — l x+i , 
whence— v** 1 d x =v x+1 (l x -l x +i) = v. v x l x -v x+1 lx+i, 

or— C x =vD x -D x+ i. 

Similarly — C x+ i =vD x+x — D x+2 , etc. 

Hence, by summation — ' 

M x =vN x -N x+ i. 

Summing once more, it is obvious that — 

R x =vS x — Sx+i. 
These formulas are useful for verification purposes. 



THE INSURANCE CONTRACT. 

All of the- preceding matter is of a general character. At length I have told about 
the history of different kinds of Insurance Organizations, and of the legislation enacted 
for their regulation, and of what men in their management have said about them and 
their objects, and of the immense sums represented by their promises to pay benefits 
upon the occurrence of stated events. 

However, in the last analysis the question of insurance is narrowed to the con- 
tract between the corporation and the individual. 

The billions of dollars involved in the promises to pay benefits are made up of 
millions of individual undertakings, and to have a comprehensive idea of the whole 
we must be informed concerning the individual agreement. 



154 

The Insurance Contracts of Companies, of Associations, and of Societies, with 
very few exceptions, have developed into an affair of business, whereby the party of 
the first part, known as the insurer, promises to pay certain sums upon the hap- 
pening of a designated event, such as death or disability, or upon the termination of a 
stated period or on the attaining of a given age or prior to termination by expiry. 
The party of the second part, known as the insured, in consideration of the promised 
benefit, agrees to make periodical contributions during the term of insurance, or for 
a limited period, or until the maturty of the contract by death, disability, or otherwise, 
or until its expiration. 

In the contract of the life company the amount of the benefit and the amount of 
the contribution are definitely stated. 

In the latest form of contract of the Fraternal Beneficiary Society the amount of 
the benefit is definitely stated, but in the great majority of certificates now outstanding 
the maximum amount only is definitely fixed. In all cases the contribution is subject 
to change. 

The relations between the parties to the contracts, or policies, issued by the life 
companies, have been established by law and by judicial decisions. The company 
must pay the amount promised when it matures under the provisions of the contract, 
and it must account to the policy-holder for unused contributions (with increment) 
should he decide to withdraw from the agreement before maturity of the promise. 

The relations between the parties to the Fraternal Beneficiary Society contract are 
unsettled. Generally the statement is correct that the society must pay the amount 
promised when it matures. In many instances the amount to be paid is limited to 
the proceeds of one assessment. In only a few cases must the society account to the 
withdrawing member for any excess of contributions over cost of protection. 

The contract of the life insurance company is scientifically constructed so that 
upon execution, the promise by the first party to pay benefit has a present worth 
equal to the promise by the second party to make periodical contributions. 

The same equitable conditions now obtain in the contracts of many Fraternal 
Beneficiary Societies; but under the majority of outstanding certificates the original 
promise was made and the contract entered into without any appreciation of the 
necessity and without any idea of the equity of requiring contributions with a 
present value equivalent to that of the benefit promised-. 

This condition is due to the fact that the Fraternal Society contract was not con- 
sidered as an affair of business. 

The conception of the transaction was that the members would always make vol- 
untary contributions to pay death benefits, and that the certificates held by themselves 
were not "Insurance Contracts," but merely evidences of membership and fraternal 
cooperation. 

The same persons, who carried polices in a life company and held certificates in a 
fraternal beneficiary society, would accept the former on a business basis of making 
adequate contributions in consideration of the benefits promised by the life company, 
and ignore entirely a similar obligation to the fraternal society, notwithstanding the 
expectation of equal money returns in the way of insurance benefits. 

From what has hereinbefore been given concerning the history of Fraternal Bene 
ficiary Societies, it is not strange that the first development of the certificate of mem- 
bership into a business contract was on the benefit side. 

The members very naturally preferred to maintain the voluntary principle a$j 
applied to contributions because it directly affected themselves, and they desired t 
maintain volition unrestrained by mathematical formula or business demands. 



1 5 5 

Since the benefits were intended for the relief or the support of themselves or 
their dependants, and since they realized the necessity for certainty in such relief or 
support, very naturally they hesitated not at all in asserting a vested right in and to 
the promised benefits. 

This development changed the view of members to look upon their certificates as 
Contracts and to depend upon their enforcement for relief to their dependants or to 
themselves. 

The members of the Societies have not failed to make demands for benefits, but 
they have neither taken the trouble nor the time to carefully consider the relation of 
these demands to the contributions required from them to make possible the pay- 
ment of the benefits. 

After many years of study and practical experience in connection with the affairs 
of Fraternal Beneficiary Societies, it is my conclusion that indifference of members 
to the importance of perpetuating these great provident institutions is the reason for 
their tendency toward paying as little and getting as much as possible in their dealing 
with the Societies. 

They strenuously oppose the proposition that the requirement for stated and 
adequate contributions is a contractual business obligation. 

Nevertheless, valuation laws and business necessities are impressing and bringing 
home the fact that the contribution side to the Fraternal Beneficiary Society contract 
is a business affair, and the party of the second part, the insured, must be held ac- 
countable as having assumed a business obligation. 



Equivalent Promises. 

The question is, What constitutes a safe and equitable insurance contract? 

Its equity consists in starting the insurer and insured on even terms, without dis- 
crimination against or favor to members, when the value of the promised benefit is no 
more nor less than the value of the promised contributions. 

Its safety consists in collecting an income and conserving an accumulation sufficient 
lo provide for the payment of promised benefits as they mature into claims. 

The Fraternal Beneficiary Society, the mutual, cooperative association of indi- 
viduals, has no capital stock, and therefore its income and accumulation must be 
derived from the contributions of its members — treating the interest earned on accu- 
mulation as an incident of excess contributions. 

When a person joins such an association, the consideration of its promise to pay a 
benefit is the promise of the individual to make contributions. 

It is obvious that the value of the promised contributions, at the inception of the 
contract, must be equal to the value of the promised benefits, otherwise the associa- 
tion could never have sufficient income to discharge its assumed liabilities — having no 
primary resources other than the contributions from its members. 

If the association is to be a successful insurance organization, it must enter into 
contract with each member, from first to last, upon a condition of equivalence in 
values of benefits and contributions. The failure to exact this conditon has caused 
all the trouble in regard to the fulfillment of promises, and has brought about the 
necessity for readjustments. 

The reason for the failure to demand contributions equal in value to that of the 
benefits promised was the inability of the organizers of Fraternal Beneficiary Societies 
to determine the proper rates of contribution. 

It was easy enough to state the amount of benefit to be granted. 



156 

To know the contribution that would certainly provide for the promised benefit 
required information not possessed by the organizers, and hence they adopted the 
method of fixing an arbitrary rate of assessment. 

Assessments-as-Needed. 

This device of levying assessments-as-needed avoided the necessity of establishing, 
in advance, any equivalent relation between benefits and contributions, The latter 
were left to be determined by the claims for benefits. 

Well-known and repeated experiences have thoroughly established the fallacy of 
the assessment-as-needed plan of contribution. It requires from ten to thirty years 
to demonstrate its fallacy by actual experience, and for that reason it has been a 
deceptive plan which has led many organizations to ruin. 

Members satisfy themselves with the plausible argument that the plan has sufficed 
to provide for claims during one period of twenty years. They ignore the fact that 
age distribution and death rates are very different in the second from the first period, 
and other conditions are so different that the plan which will serve in the first will not 
answer in the second. 

But it is not here necessary to discuss discredited plans. No valuation is applicable 
to the assessment-as-needed plan of contribution. The fact that the representatives of 
American Fraternal Societies have joined in an endorsement of the proposed Uniform 
Bill, which demands general valuation, placed the official stamp of disapproval and 
discredit upon that plan. The officials of societies still employing it are emphatic and 
vigorous in condemning it as a fallacy and a worn-out expedient. 

The assessment-as-needed plan must not be confused with that of "uniform con- 
tributions for all ages of entry" as practiced by English Friendly Societies. 

Method of Computing Rates. 

It is not in criticism of societies that reference is made to their crude method of 
levying contributions. They were intent upon doing good for their fellowmen, and 
their object was to give them the benefit of insurance protection at actual cost, without 
any element of profit. To accomplish this, they believed it necessary to steer as far 
as possible from business methods. Whatever the defects in their plan of contribu- 
tions, they established organizations which have paid to widows and orphans hundreds 
of millions of dollars. 

The purpose of those now concerned about the future solvency of these societies 
is to correct past errors and thus assure the payment of the 8,000 millions of dollars 
in outstanding promises to pay benefits, and to enable them to continue indefinitely the 
undertaking of billons of promises with certainty of performance. 

Getting down to the undisputed facts in the case, if 8,000 millions of dollars of 
present promised benelits are to be paid, then 8,000 millions of dollars must be 
raised and made ready for the benefit claims as they are presented for payment. 
Likewise the billions of future protection must be provided for by billions in con- 
tributions and interest earnings. 

In other words, the members themselves must provide for their beneficiaries, and 
the life insurance device is not to relieve them from that responsibility, but merely 
to distribute and equalize the total burden through cooperative effort. 



157 

Law of Mortality. 

Life insurance is not a gambling scheme, but a tried and tested business arrange- 
ment based upon contingencies which can be reduced by scientific treatment to mathe- 
matical accuracy. 

These contingencies are the probabilities of living and dying. 

The living make the contributions. The dying mature the claims. 

The contributions provide for the claims. 

Obviously, the aggregate contributions (and increment) must equal the aggregate 
claims. 

The original promoters of Fraternal Beneficiary Societies understood these last 
four propositions, when they adopted the device of levying assessments as needed. 
Unfortunately they neglected to reckon with the inexorable Law of Mortality, and 
this neglect condemned their plan to failure. 

All of us, even children, understand the effect of the Law of Mortality, though 
few know anything about its application to the life insurance business. 

For example, any one would answer that more persons at age 60 than at age 30 
would die within one year out of 1,000 persons at each age. 

Any one would answer that there is a limit to life — that men cannot live always. 

These are the effects of the Law of Mortality, namely : 

1. More members, amongst a given number, die at advanced than at younger ages. 

2. There is a limit to human life. 

Life insurance is the business of accepting risks on human life, with the promise 
to pay benefits in the event of death. 

To properly conduct the business of life insurance requires a knowledge of the 
duration of human life and of the probable number of deaths to be expected every 
month or every year. 

The necessity for this knowledge is to enable the insurance manager to levy 
contributions sufficient to provide for the claims expected to mature by death. 

The practical way to gain this knowledge is to make investigation of some 
mortality experience. 

Death Rate. 

Numerous investigations have been made, and it has been found that, on the 
average, about five persons die within one year, taking 1,000 at age 20. About seven 
die out of every 1,000 in one year from age 40 to 41. At 50 about eleven, at 60 
about twenty-three, at 70 about fifty-four, at 80 about one hundred and thirty-eight, 
and at 85 about two hundred and twenty-five die out of each 1,000 within one year. 
Ultimately every person must die. 

When applied to life insurance, these vital statistics mean that if a society insured 
1,000 persons at age 20 it could expect, within one year, to pay five death claims. If 
there were 1,000 insured at age 40, seven death c 1 aims could be expected within one 
year. At age 50, eleven claims. At 60, twenty-three claims. At 70, fifty-four claims. 
At 80, one hundred thirty-eight claims. At 85, two hundred twenty-five claims. At age 
99 (if 1,000 arrive at that age), one thousand claims might be expected within the 
year. So few would survive a century of life that all might be expected to die 
before attaining 100 years of age. 

With a knowledge of the probable deaths to occur within a given period out of a 
given number exposed to death, mortality ratios can be determined by dividing the 
number of deaths by the number exposed to death. 



158 

If 1,000 are exposed and five die, the mortality ratio, or death rate, is .005. If 
fifty-four die out of 1,000, the death rate is .054. 

These ratios are known as "death rates," or "probabilities of dying." 

The probability of a man dying within one year at age 20 is expressed by the 
decimal .005 and at age 70 by .054 and at age 85 by .225. These decimals are the 
quotients of the number expected to die divided by the number exposed to death, 
according to the National Fraternal Congress Table of Mortality. 

If an investigation be made of the mortality experience of any particular society, 
the actual number of deaths occurring within one year can be definitely ascertained, 
and by simple division the actual death rates or probabilities of dying can be de- 
termined. 

For example, a certain Society, for one year had an average membership of 
2,939 at age 20, and during the year there were 14 deaths. Dividing 14 by 2,939 the 
mortality ratio of .00476 is obtained. 

That is to say, the Society experienced for the year at age 20 a death rate of 
4.76 per 1,000 members exposed to death. 

The probability of dying of one of the 2,939 members was .00476. 

At age 70 it had 410 members exposed, amongst whom 25 died, making a death 
rate of nearly 6t per 1,000. The probability of dying of one of the 410 members was 
.060975. 

If the Society mentioned had insured each of the 2,939 members at age 20 for 
$t,ooo, and 14 of them died in one year, obviously the Society would have bjeem 
called upon to pay $14,000. To be able to discharge its liability it would have been 
necessary to have collected $4.76 from each of the 2,939 members. 

If the Society had insured each of the 410 members at age 70 for $1,000, and 25 
of them died in one year, there would have been 25 death claims amounting to 
$25,000, requiring $60.98 in contributions from each of them to provide for these 
claims. 

In the case of the 2,939 members, each insured for $1,000 the total insurance at 
risk would be $2,939,000, and there being $14,000 of claims, the latter amount would 
represent one year's cost to the Society in assuming liability for $2,939,000 of protec- 
tion on members at age 20. 

In the case of the 410 members at age 70, there would be only $410,000 insurance 
at risk; but the year's cost to the Society would be $25,000. 

The $14,000 and $25,000 likewise would represent the value of the benefits prom- 
ised to members at ages 20 and 70, while the $14,000 and $25,000 contributed by the 
members would represent the value of the contributions. 

With less than one-seventh of the protection the amount of the claims incurred 
was nearly double for the members at age 70, compared with those at 20. 

On the average, it costs a society from ten to twelve times more to insure members 
for one year at age 70 than at age 20. 

The insurance business is like any other kind of business ; it will become insolvent 
if cost is not obtained for what is sold. 

Unless the Society received at least $4.76 from each of the 2,939 members at age 
20, it could not pay $14,000 in claims. Similarly, $60.98 was the necessary contribution 
from each of the 410 members to enable the Society to pay $25,000 in claims incurred 
on account of the $410,000 of protection granted to them for one year. 

Distribution of Costs. 

In other words, the Society must obtain contributions from its members sufficient 
to provide for the cost of protection granted. 



1 5 9 

Of course, this fact is now, and always has been, known to managers of Fraternal 
Beneficiary Societies. 

The trouble with them has been in the distribution of the costs. 

For example, some of them made an equal levy upon all members regardless of 
age. They would throw together the 2,939 members at 20 and the 410 at 70, making 
a total of 3,349 members. 

Likewise they would make one sum of the $14,000 and the $25,000 of claims, or a 
total of $39,000, and then levy on each of the 3,349 members annual assessments 
amounting to $11.65 per $1,000. 

By the equal levy method the distribution of the total costs of $39,000 would 
compel the 2,939 members to pay $34,223.50 and the 410 members to pay $4,776.50; 
notwithstanding the fact that the Society had incurred claims of $14,000 on account 
of the 2,939 members at age 20 and of $25,000 on account of the 410 at age 70. 

The Society as a corporation is concerned only in obtaining contributions sufficient 
to provide for total claims incurred, and the equal levy plan is all right for that 
purpose, so long as it can be worked successfully. 

But under that plan the young and the old are combined to the great disadvantage 
of the former. 

Standing by themselves, the 2,939 would contribute a total of $14,000. Combined 
with only 410 members at age 70, they would be compeled to contribute $34,223.50. 

In the course of operation members continually advance in age, and if there were 
1,000 members at age 70, and only 1,200 at age 20, then, at the above ratios, there 
would be 6 deaths amongst the 1,200 and 61 amongst the 1,000. 

The 1,000 members at 70 would impose $61,000 of claims, and the 1,200 at 20 
would cause $6,000 of claims. Combined, there would be a total of $67,000 in claims. 
If the 1,000 and the 1,200 members were to pay equally, they would be called upon 
to contribute in the year $30.46 each. 

The young men at 20 might willingly submit to an annual contribution of $11.65 
(less than $1.00 per month), but few of them would pay $30.46 (more than $2.50 per 
month) for $1,000 of protection. 

The equal levy plan and the assessment-as-needed plan of contribution are alike 
defective in that they fail to distribute equally and equitably the costs of protection. 

These plans discriminate against the younger members. 

In the course of practical operation there are many members at advanced ages, 
and to favor them by exacting excessive contributions from the members at the 
younger ages, imposes so much of a burden upon the latter that they withdraw from 
the Society, and others cannot be induced to take their places, and the plan becomes a 
failure. 

This has been the final result where the equal levy or assessment-as-needed plan 
has been continued long enough. 

From this general statement may be excepted American and British Societies where 
benefits are small and the fraternal, social, or cooperative features are strong. Also 
those Societies with small benefits and where the maximum age of admission is 
low and uniform contributions are maintained by accumulation from excess con- 
tributions. 

Contribution and Cost. 

For permanent success, the contributions exacted must be proportionate to the 
cost of the protection granted. 

Where the yearly cost to the Society on $2,939,000 of insurance is $14,000, the 



160 

proper contribution for the one year for each member per $1,000 of protection would 
be $4.76. 

Where the yearly cost on $410,000 of insurance is $25,000, the proper and equitable 
contribution is $60.98 per $1,000 for the one year of protection. 

The contribution by the member is simply the purchase price, and the latter is 
always determined by the cost of production, of manufacture, or of protection, as the 
case may be — in life insurance it is the cost of protection. 

To demand a contribution per $1,000 from a member at age 70, which is ten or 
twelve times the contribution demanded of a member at age 20, is not a discrimination 
against the aged member, but is merely conforming to the requirements of life in- 
surance cost as demonstrated in actual business conduct. 

Age and Cost. 

The paramount factor in the determination of life insurance cost is that of age. 

It has been shown that the death-rate increases with the advance in age. 

An increased death-rate of course means a larger number of deaths out of a given 
number exposed to death. 

The larger number of deaths means a greater amount of claims. 

A greater amount of claims means a higher cost of life insurance protection. 

For the present argument (omitting any consideration of the effect of accumulation), 
the method of ascertaining cost is similar to that for obtaining death-rate, or probability 
of dying, namely, 

Divide the amount of claims by the insurance protection at risk. 

From the experience of any Society the amount of insurance exposed to risk can 
be obtained, and also the amount of claims can be ascertained, in a like manner to 
that explained for determination of members exposed to death, and the number dying. 

Simple division will obtain the yearly cost per $1,000 of protection at the various 
ages from year to year. 

From a recognized standard mortality table (the N. F. C), the following yearly 
costs per '$1,000 of protection have been taken for ages 20, 21, 22, 23, 24, 25, 30 and for 
each quinquennial age to 95 and annually to 99 : 

Yearly Costs Per $1,000. 

Age Cost Age Cost Age Cost Age Cost 

20 $500 30 $ 5.55 60 $ 22.75 90 $ 368.70 

21 504 35 6.15 65 3439 95 602.74 

22 5.07 40 7.17 70 53.65 96 655.17 



$5.00 


30 


5.04 


35 


5.07 


40 


5.11 


45 


5.15 


50 


5.20 


55 



23 511 45 8.87 75 85.48 97 700.00 

24 5.15 50 11.44 80 138.09 98 .... 1,000.00 

25 5.20 55 I57I 85 225.08 99 



(The Table appears in the Appendix.) 

If it is desired to grant insurance protection at actual cost, obviously a member 
would pay the amounts of the yearly costs, increasing with age. 

In other words, if a member took out $1,000 insurance at age 20, and paid $5.00 
in the first year from age 20 to 21, he would pay the actual cost, the same being his 
share of the expected death claims for that year. When he attained 21 years of 
age, he would contribute $5.04 as his share of the death losses for the year from 
age 21 to 22. Similarly, for each! advanced year of age his contribution should be 
increased to meet the increased insurance cost. 



161 

He might not die until he, was 98 years of age, nevertheless the Society would 
each year take the risk of his dying, and for that protection he should pay according 
to the cost from year to year. 

The probability of dying within the year is assumed to become a certainty at 
age 98, and hence the risk is no longer contingent, and therefore the cost of $1,000 of 
protection is $1,000, which is the expected contribution on the basis of cost, and must 
be made in the last year of the longest expected life. 

On the actual cost basis, the contribution corresponds to the yearly increasing 
costs, and consequently there must be annually increasing contributions, or their 
equivalents, in order to have a plan that will provide for the Actual Costs of protection. 

Natural Premiums. 

Annually increasing contributions, which correspond to the yearly costs, are known 
as "Natural Premiums." 

There are a number of Societies which successfully operate under modified "Nat 
ural Premium" plans. 

The usual objection urged against the pure "Natural Premium" plan is that it 
requires the largest contributions at the advanced ages, when members are supposed 
to be least able to pay. 

To meet this objection, Societies have modified the plan so as to have the increase 
in contributions discontinue above a designated age. 

The majority of Societies operate under rates of contribution intended to be 
level and uniform from ages of entry, altogether avoiding the yearly increase from 
age to age. 

Increasing Costs of Protection. 

The yearly increasing costs of protection must be provided for, whatever the 
method of contribution. 

Obviously, the actual cost of insurance to the Society cannot be affected by any 
particular method of making contributions to meet the costs. 

The insurance costs increase with advance in age, because the Law of Mortality 
so decrees. 

The yearly increasing costs must necessarily furnish the basis for the determina- 
tion of contributions, under any and all methods. 

The simplest and the natural method would be to have the contributions corres- 
pond to the costs — which is the natural premium plan. 

However, the natural premium plan would make rates so high at extreme old 
ages that the advantage of protection would not justify the contribution to provide 
for its cost. (See foregoing yearly costs for age 70 and above — the yearly costs being 
the same as the natural premiums, or increasing contributions). The results in prac- 
tical operation have been to adopt a modified natural premium plan, or a level premium 
plan. 

"Life Expectancy." 

A great many people imagine that "Life Expectancy" enters into the computation 
of level rates of contribution. 

Recently a Texas jurist, in an otherwise able and learned opinion, made the 
statement that the adequate level rate was that amount which, placed at compound 
interest, would produce $1,000 at the end of life expectancy. 



162 

Only the notorious lack of mathematical acumen by lawyers can excuse this 
wholly erroneous statement by the learned Lone Star judge. 

It is surprising that he failed to test his statement before solemnly delivering 
it in judgment. For example: 

The net level annual premium; for $1,000 of insurance at age 40, by the American 
Experience Table of Mortality and four per cent interest, is $22.35. 

The period of "Life Expectancy" at age 40, by the same table, is 28.18 years. 

The amount of $22.35 paid annually at four per cent compound interest for 
28.18 years is $1, 175-39- 

The net level annual premium by the National Fraternal Congress Table of 
Mortality and four per cent interest, for $1,000 of insurance at age 40, is $20.11. The 
period of "Life Expectancy" by that table, at age 40, is 29.9 years. The amount of 
$20.11 paid annually and improved at four per cent compound interest for 29.9 years 
is $1,168.19. 

In both instances the amount, at the end of "Life Expectancy," is in excess of 
$1,000. , , 

The statement of the judge is not only erroneous, but it is fallacious in the 
failure to take into consideration the fact that a portion of the net level annual pre- 
mium must be taken to provide for the yearly costs of protection in paying the claims 
which must mature from year to year. Hence, it is impossible to place the whole 
premium at compound interest annually. 

When the member's share of annual losses is deducted from the net premium, 
and the balance improved at four per cent compound interest for the period of "Life 
Expectancy," the net accumulation, at the end of the period by the American Experi- 
ence Table for 28.18 years, is $520.32, and by the National Fraternal Congress Table 
for 29.9 years, it is $550.84. In neither case is the accumulation at the end of "Life 
Expectancy" very much more than one-half of $1,000. 

Many persons, without expert knowledge, have arrived at radically wrong conclu- 
sions by the employment of "Life Expectancy" and "Average Age" in their compu- 
tations. The general public, and even the courts, have been misled by these plausible 
fallacies. "Life Expectancy" and "Average Age" do not enter into the ordinary com- 
putations of life insurance premiums. 

But we must return to the paramount consideration of the Insurance Contract, 
and an exposition of the relations of the insurer and the insured in respect of the 
integrity of the Contract in its twofold aspect of the 

Benefit Side and the 
Contribution Side. 

The Benefit Side involves the insurer's obligation to pay the promised benefit, 
whether it be a death benefit, a disability benefit, an endowment benefit, or an old 
age benefit. 

The insurer is not altogether responsible and reliable unless every precaution is 
taken to assure the payment of the promised benefit when it matures into a claim. 

If the promise is to pay a benefit of $1,000 -at death of the insured, whenever that 
event may occur, it is no justifiable excuse for failure to provide for the performance 
of the promise by alleging that the happening of the event is uncertain, and the 
date of its occurrence subject to chance, and therefore not ascertainable by the ordi- 
nary rules of business. 

The promise to pay should not be made if it is impossible or doubtful of per- 
formance. 



163 

If it partakes of a lottery or a gamble, the making of the promise is in violation 
of public policy, and should be prohibited. 

In this connection, and for emphasis, I desire to repeat what I have said hun- 
dreds of times in public addresses and to managers and officials of Fraternal Bene- 
ficiary Societies, That no Life or Casualty insurance corporation should be permitted 
to transact business unless it could show that it would be able (under normal con- 
ditions) to carry out its promises in good faith and according to the terms and tenor 
of its contract. 

Possibility of Performance. 

Unless a demonstration of possible performance can be made, the law should 
prohibit the promise. 

Then, What is the demonstration which will show that it is possible for an insur- 
ance corporation to provide for the payment of $1,000 on the death of an insured 
person whenever that event may happen. 

First. It could show that it had $1,000 in cash, or well secured funds which 
would be held until the occurrence of the event, and then used for the payment of 
the benefit. 

Second. It could show that it held the present worth of the $1,000 safely invested 
and earning interest at a rate that would increase the sum, representing the present 
value of the $1,000, to the face value of the promised benefit at the date of its matu- 
rity by death. 

Third. It could show that it had the offsetting promise from the insured person 
to make periodical contributions to the benefit funds of the corporation, and that the 
present worth of these promised contributions was equal in value to the present 
worth of the promised benefit. And should the insured person default in his contri- 
butions the corporation thereby would be released from the promise to pay the benefit. 

When the proposition is thus plainly put, and its purpose is understood and 
appreciated, it is inconceivable that any honest man could urge objection to a statu- 
tory requirement for such a demonstration as a condition precedent to doing business. 

The Insurance Problem. 

The query often comes to me, You tell us what the demonstration should show, but 

How are we to determine the present value of $1,000 payable at an unknown date? 

How are we to determine the present value of the promise of the insurant to 
make future periodical contributions when the number may be one or one hundred? 

How are we to determine definite provisions for so uncertain an event as the 
death of an individual which may occur tomorrow or fifty years hence? 

These questions in themselves bear witness to the peculiar character of life 
insurance, and clearly indicate the necessity for the application of special rules when 
treating the Insurance Contract as an affair of business. 

If $1,000 were payable one year hence, and were it desired to obtain the present 
value on the basis of four per cent interest per annum, any sixth grade schoolboy 
could readily answer that it was obtained by dividing 1.04 into $1,000. Or taking the 
present value of $1.00 due one year hence, .961538, and multiplying by 1,000. 

If the $1,000 were due ten years hence, multiply by .675564, the present value of 
$1.00 due ten years from date. 

The insurance problem is to find the present value of $1,000 payable at the death 
of the insured. 



164 

Obviously, the answer is not obtained by the simple use of interest discount fac- 
tors for the very good reason that these cannot be applied until some time is set 
for the payment of the principal sum. 

How can a date for maturity be determined when it depends upon the uncertainty 
of a human life? than which there is nothing less certain, 



Cooperation. 

This question develops and discloses the paradoxical nature of the life insurance 
business. 

I have said that we must bring) under analysis the Insurance Contract between 
the insurer and the insured before their relations can be understood, equity estab- 
lished and success assured. 

In answer to the last question, I now positively must assert that it is a business 
impossibility to enter into a life insurance contract with a single individual separate 
and apart from other insurants similarly situated. 

The uncertain duration of the individual life would make a single contract for 
life insurance a bet, or gamble, pure and simple. 

Mutual cooperation is the essence of life insurance. 

There must be a number of insured lives similarly conditioned before the single 
risk is brought within the operation of the Law of Mortality. 

This Law, like all Laws of Nature in their operation, produces regularity and 
continuity in the occurrences of deaths amongst a given number within a given time 
under similar conditions. 

This Law makes no more certain the duration of the individual life of any one 
of the many associated in mutual cooperation. 

Its function is to establish the fact of regularity in the number that may be 
expected to die within a given period from amongst a group of persons similarly 
situated. 

We must, therefore, predicate the conduct of a life insurance business upon the 
assumption of cooperation by a number of persons associated for mutual protection, 
with a managing corporation only as means for the accomplishment of the desired end. 

PRESENT VALUE OF THE BENEFIT. 

To find the present worth of the promise to pay $1,000 on the death of an 
individual, we must find the present value of similar promises to a number of 
insurants similarly situated, and then by division reduce the value to the basis of 
the promised $1,000 benefit. 

Even then, before we can make a start, the Laws of Mortality must be brought 
to a definite basis for mathematical treatment. 

This is accomplished by the selection of some standard Mortality Table, or by 
the construction of a mortality table from the actual experience of a life insurance 
organization, or from some exhibit of vital statistics. 

In passing, it may be recalled that the philosopher and scientist, Dr. Milne, could 
not secure statistics from any life insurance company, because such data were not 
available one hundred and thirty-five years ago, hence he had recourse to the rec- 
ords of births and deaths of his native village for the statistics to reduce the Law 
of Nature to tangible, workable form. 



165 

We have the advantage of one hundred years of practical operation in the 
conduct of the life insurance business should we desire to refer to actual experience 
for our statistics. Or, we can select any one of many Mortality Tables already 
at hand. 

In another part of this book I have given the several Tables constructed from 
the experiences of forty-three Fraternal Beneficiary Societies, and also the National 
Fraternal Congress and the American Experience mortality tables, together with 
the "death rates" from numerous other tables. 

For purposes of illustrating this text I shall take my figures from the National 
Fraternal Congress Table of Mortality. 

Bear in mind that the object is to obtain the present wiorth of promises to pay 
future benefits upon the death of members. 

The use of the Mortality Table is to ascertain the time for payment of claims, 
in order that they may be discounted to find their present value. 

Referring to the National Fraternal Congress Table of Mortality (appearing in 
the Appendix), it is seen that at age 35 (and we will assume age 35 for our pros- 
pective insurant), 92,215 are the number living, and of these 567 are assumed to die 
during the year of age 35-36. 

Subtracting 567 from 92,215, it is seen that the number living at age 36 is 91,648. 
Of the latter 578 die during the year of age 36-37. 

The two columns record the number living at each subsequent age and the 
number dying during each year of age, until the last three living at age 98 die dur- 
ing the year of age 98-99. 

Assuming that each was insured for $1,000, the total protection promised would 
be $92,215,000 upon the issuance of the 92,215 contracts. 

According to the Law of Mortalit)', exemplified in this table, in the first year there 
woud be 567 deaths maturing $567,000 of death benefits. 

In actual practice, these deaths would occur from week to week and from month 
to month during the year, but to simplify the succeeding calculations it will be 
assumed that payment of claims is made at the end of the year. 

Then the $567,000 of death benefits would be assumed to mature one year hence. 
Multiplying by the present value of $1.00 due in one year, .961538, the present value 
of $567,000 is found to be $545,190 (giving results by use of five-place logarithms). 

In the second year of insurance of the 91,648 living 578 are expected to die, 
maturing $578,000 in claims, assumed to be due and payable at the end of that year, 
which would be two years from .the beginning of the Insurance Contracts. To find 
the present worth of $578,000 due two years hence multiply by the decimal .924556, 
which is the present value of $1.00 due in two years. 

From the foregoing it is readily understood that the yearly instalments of 
claims can be ascertained from the column of the number dying as given in the 
Table of Mortality. When the yearly instalments have -been recorded at the ages 
attained when matured into claims, each instalment can be brought to present value 
by employment of the discount factor corresponding to the year of expected maturity 
after the beginning of the insurance. 

Here it may be stated that were it desired to obtain reults on the basis of the 
experience of the forty-three Societies, or of the Woodmen of the World, or ot the 
Royal Arcanum, or of the Knights of the Maccabees of the World, or of the Knights 
and Ladies of Security, or of any other Society from whose experience a mortality 
table has been constructed, then the yearly instalments of claims would be secured 
from the column of the number dying in such table. 



166 

Exhibit i in Column 2 gives the instalment of claims for each of the 64 years 
from age 35 to 99, the aggregate being the total of insurance, $92,215,000, issued at 
age 35. In other words, by employment of the mortality table we anticipate the 
time when all of the insured persons would be dead and all of the promised benefits 
matured into claims by annual instalments as deaths are assumed to occur from 
year to year. 

In column 3 are given the discount factors on the assumption of four per interest. 

In column 4 are the products of the factors by the assumed amount of claims, 
for corresponding years, the results representing present worth as at the beginning 
of the insurance. That is to say, $3,000 due 64 years hence has a present value of 
$24378. 

The sum of the present values in column 4, $27,818,663.44, is the present value 
of the sum of the instalments of claims, $92*,2i 5,000. 

The meaning of the Exhibit is : If 92,215 persons were insured at age 35 under 
contracts promising a benefit of $1,000 payable at the death of each, it might be 
expected — 

That $567,000 of the $92,215,000 would become claims by deaths in the first year 
of insurance, $578,000 in the second year, $591,000 in the third year, and so on for 
succeeding years ; 

That 64 years would expire before the maturity of the last three claims of $3,000 
in the year of age 98-9; 

That the present worth of the promises to pay $92,215,000 in benefits as they are 
expected to mature into claims from year to year would be $27,818,663.44; 

And that the present value of the promise to an individual insurant to pay $1,000 
at his death would be the average present value, or $27,818,663.44 divided by 92,215, 
equal $301.68. 

Thus we have solved the problem to find the present value of the promise to pay 
a benefit of $1,000 at the death of a person aged 35 at date of insurance whenever 
death may occur. 

The $2 7, 8 1 8,663. 44 represents the sum, if paid at the time the insurance is effected, 
that would provide for all of the yearly installments of claims to the total of 
$92,215,000, when supplemented by four per cent compound interest. 

This is called the "Single Premium" for the payment of thei claims arising out 
of the $92,215,000 of insurance. 

Reduced to the basis of $1,000 (by dividing 92,215 into $27,818,663.44), $301.68 is 
the "Single Premium," or single payment to be made by the person at age 35 to 
purchase an insurance of $1,000 covering the whole period of life, the sum insured 
being payable at death whenever that event occur. 

Obviously, the present value of the sum insured is identical with the single 
payment for the purchase of the sum insured. 

r Vhe present value of the promised benefits is equal to the single payment to 
assure the performance of the promise. . ; 

If $27,818,663.44 were improved at four per cent interest for one year, and 
deduct the claims for the first year, $567,000; and improve the remainder at four 
per cent interest for another year, and deduct the claims for the second year, 
$578,000; and continue the process for 64 years, the amount at the end of the sixty- 
fourth year would equal the last instalment of claims, $3,000. 

In this way it can be proved that, 



EXHIBIT I. 



Years 
of In- 
surance. 


Yearly Instalments 
of Death Claims. 


Present Value of 
11 .00 Due n 
Years Hence. 


Present Value of 
Instalments of 
Death Claims. 


1 


$ 567,000 


.961538 


$ 545,190 00 


2 


578 


000 


.924556 


534 


,390 00 


3 


591 


000 


.888996 


525 


400 00 


4 


606 


000 


.854804 


518 


010 00 


5 


622 


000—$ 2,964,000 


.821927 


511 


230 00—12,634,220 00 ■ 


6 


640 


000 


.790315 


505 


800 00 


7 


660 


000 


.759918 


501 


550 00 


8 


683 


000 


.730690 


499 


060 00 


9 


708 


000 


.702587 


497 


430 00 


10 


734 , 


000— 6,389,000 


.675564 


495 


870 00— 5,133,930 00 


11 


761 


000 


.649581 


494 


320 00 


12 


790 


000 


.624597 


493 


440 00 


13 


822 


000 


.600574 


493 


670 00 


14 


857 


000 


.577475 


494 


890 00 


15 


894 


000— 10,513,000 


.555265 


496 


410 00— 7,606,660 00 


16 


935 


000 


.533908 


499 


210 00 


17 


981 


000 


.513373 


503 


620 00 


18 


1,029 


000 


.493628 


507 


950 00 


19 


1,083 


000 


.474642 


514 


040 00 


20 


1,140 


000— 15,681,000 


.456387 


520 


270 00—10,151,750 00 


21 


1,202 


000 


.438834 


527 


470 00 


22 


1,270 


000 


.421955 


535 


880 00 


23 


1,342 


000 


.405726 


544 


480 00 


24 


1,418 


000 


.390121 


553 


200 00 


25 


1,501 


000 


.375117 


563 


050 00 


26 


1,588 


000 


.360689 


572 


770 00 


27 


1,681 


000 


.346817 


583 


000 00 


28 


1,778 


000 


.333477 


592 


930 00 


29 


1,880 


000 


.320651 


602 


820 00 


30 


1,985 


000 


.308319 


612 


010 00 


31 


2,094 


000 


.296460 


620 


800 00 


32 


2,206 


000 


.285058 


628 


840 00 


33 


2,318 


000 


.274094 


635 


350 00 


34 


2,430 


000 


.263552 


640 


440 00 


35 


2,539 


000 42,913,000 


.253415 


643 


410 00—19,008,200 00 


36 


2,645 


000 


.243669 


644 


510 00 


37 


2,744 


000 


.234297 


642 


910 00 


38 


2,832 


000 


.225285 


638 


000 00 


39 


2,909 


000 


.216621 


630 


140 00 


40 


2,969 


000 


.208289 


618 


420 00 


41 


3,009 


000 


.200278 


602 


630 00 


42 


3,026 


000 


.192575 


582 


730 00 


43 


3,016 


000 


.185168 


558 


470 00 


44 


2,977 


000 


.178046 


530 , 


040 00 


45 


2,905 


000 


.171198 


497, 


340 00 


46 


2,799 


000 


.164614 


460 


750 00 


47 


2,659 


000 


. 158283 


420 


870 00 


48 


2,485 


000 


.152195 


378, 


210 00 


49 


2,280 


000 


.146341 


333 


660 00 


50 


2,050 


000 


.140713 


288 


460 00 


51 


1,800 


000 


.135301 


243 


540 00 


52 


1,539 


000 


.130097 


200 


220 00 


53 


1,277 


000 


.125093 


159 , 


740 00 


54 


1,023 


000 


.120282 


123 


050 00 


55 


788 


000 


.115656 


91, 


136 00 


56 


579 


000 


.111207 


64, 


389 00 


57 


404 


000 


.106930 


43, 


200 00 


58 


264 


000 


.102817 


27, 


144 00 


59 


161 


000 


.098863 


15, 


917 00 


60 


89 


000 


.095060 


8, 


460 40 


61 


44 


000 


.091404 


4, 


021 80 


62 


19 


000 


.087889 


1, 


669 90 


63 


7 


000 


.084508 


591 56 


fi4 


3 


000 


081 9SR 




942 78 



168 

The present value of the promised benefits must be equal to the single payment 
to assure the performance of the promise, and 

That is the demonstration which should be required of every life insurance 
organization before being permitted to make promises for the payment of future 
benefits upon the death of citizens of any State or Province. 

If the applicant for life insurance protection were 45 instead of 35 years of age, 
the process for rinding the present value, or "Single Premium,'' of the promise to 
pay $1,000 at his death would be identical with that explained for age 35, differing 
only in the fact that the Mortality Table would be entered at age 45, instead of at 
35, and the first yearly instalment of claims would be $761,000 on account of the 
761 deaths during the year amongst the 85,826 persons living at age 45. 

Similarly for applicant at age 20. The Table would be entered at that age, 
the first yearly instalment of claims being $500,000 on the 100,000 living at age 20. 

There would be a total of $85,826,000 of claims, and 54 yearly instalments to 
be dicounted for the entrants at age 45, while the total would be $100,000,000, and 
there would be 79 yearly instalments of claims for the entrant at age 20. 

The present value of the promise to pay $1,000 at the death of the entrant at age 
45 would be $391.25, and at age 20 it would be $211.86. These amounts represent 
the "Single Premium" for the purchase of $1,000 insurance at the respective entry 
ages. 

The present value of the promise to pay $1,000 at the death of a member aged 70 
would be $705.18, representing the "Single Premium" for the purchase of $1,000 whole 
life insurance at age 70. 

A second reading of the foregoing explanation is justified by its importance, since 
a thorough understanding of the process to determine the present value of the prom- 
ised benefit is necessary for ready comprehension of the process to determine the 
amount of the level annual contribution rate adequate to provide for the promised 
benefit. 

Before re-reading, have fixed in mind the fact that the column of the number 
dying during each year of age, as shown by the selected Mortality Table, determine 
the yearly instalments of claims for the period covered by the promise of protec- 
tion, whether that period be for the whole term of life or for a shorter stipulated 
term, and from these yearly instalments of claims is obtained the present value of 
the benefits promised to be paid during such term. 

For illustration: If the promise were to pay a benefit of $1,000 provided death 
occur before age 70, and the insurance was taken at age 35, then on $92,215,000 the 
total of expected benefit payments would be the sum of the claims in column 2 ex- 
pected to mature during the period of 35 years from age 35 to age 70 amounting to 
$42,913,000. The total of the present values of the instalments of yearly claims is 
the sum of the values in column 4 for the 35 years from age 35 to age 70, amounting 
to $19,008,200. 

Note carefully : 

The present value of $92,215,000 of life insurance benefits, promised to be paid 
whenever death occur, covering the whole period of life, is $27,818,663. 

The present value of $92,215,000 of life insurance benefits, promised to be paid 
if death occur prior to age 70, covering a period of 35 years, is $19,008,200. 

The total amount of claims expected under the whole life contract on the $92,- 
215,000 of promised protection is $92,215,000. 



169 

The total amount of claims expected under the term contract to age 70 on the 
$92,215,000 of promised protection is $42,913,000. 

The present value (single payment) of $1,000, under a term contract to age 70, 
is $19,008,200 divided by 92,215, equal $206.12 — as against $301.68 on the whole life 
contract. 

Under a term contract for twenty years, of $92,215,000 face value of insurance 
at age 35, it would be expected that $15,681,000 would mature into claims (the sum 
of column 2 for 20 years), the present value of which would be $10,151,750. The 
present value (or single payment) on $1,000 would be $10,151,750 divided by 92,215 
equal $110.09. 

On a 15-year term the insurance would be $92,215,000; the expected claims would 
be $10,513,000; their present value, $7,606,660; and the present value of $1,000 would 
be $82.49. 

On a 10-year term the figures would be: Insurance, $92,215,000; total expected 
claims, $6,389,000; total present values, $5,133,930; present value of $1,000, $55.67. 

On a 5-year term the figures would be: Insurance, $92,215,000; total claims, $2,964,- 
000; present value, $2,634,220; present value of $1,000, $28.67. 

PRESENT VALUE OF THE CONTRIBUTION. 

It is exceptional for a person to pay one premium for life insurance. 

Ordinarily it is desired that the contributions be made annually, semi-annually, 
quarterly, or monthly, and that they continue through the whole period of life or 
for a limited number of years. 

Let it be assumed that the contributions are to be annually in advance and to 
continue until death. 

The question returns, How is the annual contribution to provide for $1,000 of 
insurance to be determined? 

I have heard hundreds of well-informed men explain the method of computation 
as did the learned Texas Judge heretofore quoted, who stated that "the adequate level 
contribution rate was that amount which placed at compound interest would produce 
$1,000 at the end of life expectancy." 

Many others have said that the proper annual level rate could be obtained by 
dividing the "single premium," or present value of the sum insured by the years of 
life expectancy. Thus : For the whole life annual level premium for $1,000 at age 
35 divide $301,68 by 34, which would give about $9 instead of the true net rate of 
$16.62. 

A very intelligent and well-educated man, and altogether of fine business capacity, 
several years ago announced that he had solved the problem of an equitable and 
adequate contribution rate, and he founded a society to exploit the plan. A number of 
societies now operate upon similar plans. The scheme, generally described, is 
somewhat as follows : 

The single premium is divided by the number of years of life expectancy to de- 
termine the annual level contribution rate. If the member dies before the end of 
life expectancy, the amount of the single premium, less the number of assessments 
paid, is deducted from the face of the certificate. 

Thus: Single premium at age 35, $301.68; years of life expectancy, 34; level annual 
rate, $301.68 divided by 34 equal $8.88 per annum per $1,000, or 72 cents per 
month. The member pays twenty-four monthly assessments and dies. His bene- 
ficiaries receive $1,000 minus ($301.68 minus $17.76) equal $716.08. 



170 

The effect of the plan is to have an increasing insurance, beginning with $698.32 
($1,000 minus $301.68) and increasing 72 cents with each monthly contribution until 
the amount equals the face of the certificate at the end of life expectancy. 

The effect of operation under this plan was exaggerated, and in consequence 
the contribution rates were made too low. The manner of obtaining them was alto- 
gether erroneous. 

This brings us to the correct method for the determination of the adequate level 
rate, which is preceded by the determination of the single premium for an annuity. 

Again recourse must be had to the Mortality Table. 

Turn to the Table in the Appendix and find opposite age 35, in the column giving 
the number living, 92,215 as the first factor in the computation. 

Assume that the 92,215 persons agree to> contribute $1.00 at the beginning of each 
year for the whole period of their lives. 

We would have at the beginning of the first year $92,215. 

From the Table we find that 91,648 are expected to be living at the beginning of 
second year, at age 36, and hence we expect a second contribution of $91,648 one 
year hence. 

From the Table we find that 91,070 are expected to be living at the beginning of 
the third year, at age 37, and we expect to receive at the beginning of the third 
year a contribution of $91,070. 

From the Table we find that 3 are expected to be living at the beginning of tho 
64th year, at age 98, and we expect to receive from them our 64th annual contribution 
of $3.00. 

Under the assumption we have the promise of contributions at the beginning of 
each year of $1.00 from each survivor, therefore, $1.00 times, the number of living 
at each year of age will give the expected yearly instalments of contributions for 
the 64 years, at the expiration of which all of the contributors are assumed to 
be dead. 

Exhibit 2 gives, in column 2, the yearly instalments of promised contributions ; 
in column 3 are the interest discount factors (being unity at beginning of first year, 
because the first instalment is paid in advance) ; and in column 4 are the present 
values of the yearly instalments of the promised contributions, being the product 
of column 2 by column 3. 

The total of the promised contributions is $3,167,619, and the total of the present 
values of the yearly instalments is $1,674,337.74. 

The $1,674,337.74 is the single payment that could be made at age 35 as the 
equivalent of $1.00 annually to be contributed at the beginning of each year, by 
each of the survivors of the 92,215 entrants. 

An annual payment is known as an "Annuity," because it is a sum of money 
paid annually. 

The above results might be stated to show that for a present sum in one payment 
of $1,674,337.74, the 92,215 persons could purchase life annuities of $1.00 each, payable 
annually in advance, because the present sum of $1,674,337.74, improved at 4 per cent 
compound interest, will provide for the yearly instalments of $1.00 to each living per- 
son (on the assumptions of the National Fraternal Congress Table of Mortality). 

Any one can make proof of the statement by deducting from the present sum, 
$92,215 (as the first instalment or annuity payment to the 92,215 entrants) ; and 
then improve the remainder at 4 per cent interest for one year and deduct $91,648 (as 
the second annuity payment to the 91,648 living at the beginning of the second 



EXHIBIT II. 



Begin- 
ning of 
Yrs. of 

ns. 


Amount of Annual 


Tn sent Value of 


Present Value of 


Contributions at 


SI. 00 Due n Years 


Yearly Instalments 


$1.00 per Member. 


Hence. 


of Contributions. 


1 


$ 92,215 


1.000000 


$ 92,215.00 


2 


91,648 


.961538 


SS, 123.30 


3 


91,070 


.924556 


84,199.50 


4 


90,479 


.888996 


80,435.80 


5 


89,873—$ 455,285 


.854804 


76,824.80—$ 421,798.40 


6 


89,251 


.821927 


73,358.90 


7 


88,611 


.790315 


70,031.70 


8 


87,951 


.759918 


66,836.60 


9 


87,268 


.730690 


63,766.90 


10 


86,560— 894,926 


.702587 


60,816.90— 756,609.40 


11 


85,826 


.675564 


57,982.10 


12 


85,065 


.649581 


55,257.50 


13 


84,275 


.624597 


52,639.00 


14 


83,453 


.600574 


50,120.80 


15 


82,596— 1,316,141 


.577475 


47,698.20— 1,020,307.00 


16 


81,702 


.555265 


45,367.30 


17 


80,767 


.533908 


43,123.20 


18 


79,786 


.513373 


40,960.90 


19 


78,757 


.493628 


38,877.70 


20 


77,674— 1,714,827 


.474642 


36,868.40— 1,225,504.50 


21 


76,534 


.456387 


34,930.10 


22 


75,332 


.438834 


33,059.30 


23 


74,062 


.421955 


31,251.90 


24 


72,720 


.405726 


29,505.40 


25 


71,302 


.390121 


27,817.40 


26 


69,801 


.375117 


26,184.40 


27 


68,213 


.360689 


24,604.50 


28 


66,532 


.346817 


23,075.20 


29 


64,754 


.333477 


21,594.80 


30 


62,874 


.320651 


20,161.40 


31 


60,889 


.308319 


18,773.90 


32 


58,795 


.296460 


17,431.00 


33 


56,589 


.285058 


16,131.80 


34 


54,271 


.274094 


14,875.90 


35 


51,841— 2,699,336 


.263552 


13,663.30— 1,578,564.80 


36 


49,302 


.253415 


12,494.10 


37 


46,657 


.243669 


11,369.30 


38 


43,913 


.234297 


10,289.10 


39 


41,081 


.225285 


9,255.40 


40 


38,172 


.216621 


8,269.20 


41 


35,203 


.208289 


7,332.70 


42 


32,194 


.200278 


6,448.00 


43 


29,168 


.192575 


5,617.30 


44 


26,152 


.185168 


4,842.80 


45 


23,175 


.178046 


4,126.40 


46 


20,270 


.171198 


3,470.40 


47 


17,471 


.164614 


2,876.10 


4S 


14,812 


.158283 


2,344.60 


49 


12,327 


.152195 


1,876.20 


50 


10,047 


.146341 


1,470.40 


51 


7,997 


.140713 


1,125.30 


52 


6,197 


.135301 


838.50 


53 


4,658 


. 130097 


606.00 


54 


3,381 


.125093 


423.00 


55 


2,358 


.120282 


283.60 


56 


1,570 


.115656 


181.60 


57 


991 


.111207 


110.20 


58 


587 


. 106930 


62.80 


59 


323 


.102817 


33.20 


60 


162 


.098863 


16.00 


61 


73 


.095060 


6.90 


62 


29 


.091404 


2.70 


63 


10 


.087889 


88 


64 


3 


.084508 


26 



172 

year) ; and proceeding in a similar manner to the 64th year, when it will be found that 
$3.00 are on hand to pay the 3 survivors at the beginning of the year of assumed 
existence. 

Dividing $1,674,337.74 by 92,215 we obtain $18.16 (nearly) as the present value, 
or "Single Premium," for a Life Annuity of $1.00 beginning at age 35. 

THE LEVEL ANNUAL PREMIUM. 

Having obtained the Single Premium ($301.68) for a promised benefit of $1,000 
payable at death whenever that event may occur; 

Having obtained the Single Premium ($18.16) for a promised payment of $1.00 
annually until death; 

We are now in position to solve the problem as to the amount of the Level Annual 
Contribution to provide for a promised Death Benefit of $1,000. 

The solution is effected by establishing the relations between the Single Premium 
for the Insurance and the Single Premium for the Annuity — that is, between the 
present value of the Promised Benefit payable at death and the present value of 
the Promised Annual Contribution payable until death. 

Note the simplicity of the equation : 

If $18.16 will provide for $1.00 payable annually until death, then a present sum 
of $301.68 will provide for $16.62 payable annually until death, being the quotient of 
$301.68 divided by $18.16. 

That is to say, $16.62 paid annually is the equivalent of $301.68 paid in one sum. 
Or, $301.68 is the present value of an annual contribution of $16.62 payable during 
life; 

But $301.68 is also the present value of a Benefit of $1,000 payable at death; 

Or $301.68 is the Single Payment required to provide for the Benefit of $1,000 
payable at death ; 

Then $16.62, payable annually until death, being the equivalent of $301.68 paid 
in one sum, must be the annual contribution required to provide for the promised 
Benefit of $1,000 payable at death. 

It has taken many words and much space to make a plain and untechnical ex- 
planation of the method to determine the level annual contribution at age 35 to 
provide for the promise of $1,000 payable at death, but I feel justified in the effort 
because of the prevailing unfamiliarity with the subject by capable and successful 
managers. 

However, the whole matter resolves itself into the calculation of Single Premiums 
for Insurance and Single Premiums for Annuities, and with the first as dividends 
and the second as divisors, the quotients will be the required Level Annual Con- 
tribution Rates. 

Thus: To find the level annual contribution (paid in advance) to provide for 
$1,000 at death prior to age 70; 

Divide 92,215 into $1,578,564.80, the sum of the present values of the yearly in- 
stalments of contributions for the 35 years (35-70), to obtain $17.12, the Single 
Premium for an Annuity payable to age 70. 

Then divide $206.12, the Single Premium to provide $1,000, payable at death prior 
to 70, by this temporary annuity $17.12, and the result is $12.04, the required Level 
Annual Contribution to provide $1,000 payable at death prior to age 70. 

For the Level Annual Contribution for $1,000 at age 35 on a 20-year term contract, 



173 

Divide $1,225,504.50 by 92,215, obtaining $13.29, the value of the temporary an- 
nuity, and dividing this into $110.09, the single premium for the temporary insurance, 
we obtain $8.28 as the required rate. 

By a similar process (using the side totals in the two exhibits) the Level Annual 
Contribution Rate can be obtained for 15 and 10 and 5-year terms for entry age 35. 

Exhibits could be prepared for other ages of entry and values computed by follow- 
ing the procedure set forth in the given illustration. 

It is well to explain that the Level Whole Life Annual Contribution Rate could 
have been directly obtained by dividing $1,674,33774 (the present value of yearly 
instalments of $1.00 contributions) into $27,818,663.44 (the present value of the 
yearly instalments of claims). 

And similarly the annual contribution for Term to age 70 could be found by 
dividing $1,578,564.80 into $10,008,200.00. For 20-YearTerm, $1,225,504.50 into $10,- 
151,750.00. And similarly for the other terms. 

In other words if the sum of the present values of the yearly instalments of 
claims on the basis of $1,000 per member is divided by the sum of the present values 
of the yearly instalments of contributions on the basis of $1.00 per member, the 
quotient will be the level annual contribution rate to provide for the $1,000 death benefit. 

The employment of this principle gives a short cut for the determination of the 
Single Premium for Insurance, the Single Premium for an Annuity and the Level 
Annual Premium. 

This shorter process consists of a summation of the column of present values of 
promised benefits and the column of present values of promised contributions (columns 
4 of Exhibits 1 and 2), beginning the summation at the 64th item and taking sub- 
totals in summing upward to the first year at age of entry. From the summed 
columns readily can be gotten the dividend and divisor to obtain the level annual 
contribution rate as above indicated. This process is explained in more detail in 
the treatment of "Commutation Columns." 

The level annual premiums for limited payment contracts and endowment con- 
tracts can be obtained from the present values of instalments of claims and present 
value of the instalments of contributions in a similar way to that of determining 
the level annual premium for whole life contracts and for term contracts. 

It has been shown that by dividing the sum of the instalments of claims $27,818,- 
663.44 by the sum of the present values of the instalments of contributions, $1,674,- 
33774, the net level annual premium for a whole life contract on $1,000 at age 35 
is obtained, and it has been shown that if we divide the sum of the present value of 
the instalment of claims for 20 years, $10,151,750, by the sum of the present values 
of the instalments of contributions for 20 years, $1,225,504.50, we obtain %8.28, the 
level annual premium for a term contract for twenty years, to provide for $1,000 
payable at death within that period. 

If now we want the net level annual premium for a whole life contract where the 
benefit is payable at death whenever that event occur, but the contributions are 
limited to 20 years, we would divide the sum of all the present values of the 
instalments of claims, $27,818,663.44, by the sum of the present values of the instal- 
ments of contributions for 20 years, $1,225,504.50, giving us $22.70 as the net level 
annual premium to provide for $1,000 death benefit whenever that even may occur 
with the contributions limited to 20 annual payments. 



174 

If we wanted to limit the number of annual contributions to 15, then we would 
divide $27,818,663.44 by $1,020,307. Similarly we would divide by the sum of the 
present values of the instalments of contributions for 10 years or 5 years to 
obtain the level annual premium for whole life protection with the contributions 
limited to 10 or 5 payments. 

The annual premium for an endowment insurance is made up of the sum of an 
annual premium for term insurance and an annual premium for "pure endowment" 
insurance. To obtain the net annual premium for a 20-year endowment policy, we 
would take the annual premium for the 20-year term, $8.28, and add it to the premium 
for a pure endowment. 

An endowment insurance contract promises to pay the sum insured at the end 
of the stated period or to pay the sum insured at prior death. If we have under 
consideration a 20-year endowment insurance contract, then the 20-year term level 
annual rate of $8.28 for entry age 35 would provide for the $1,000 payable at death 
within the period 20 years, and this $8.28 is obtained as heretofore explained. 

The endowment would provide for the payment of $1,000 to each of the survivors 
at the end of the 20 years. By reference to the mortality table, in the column of the 
number living opposite age 55 (the end of 20 years from age 35), we find that the 
number of survivors are 76,534, and each one of these receiving $1,000 would make 
$76,534,000 that we must have on hand at the end of 20 years in order to pay the 
promised endowments. By reference to column 4 of Exhibit 2 we find that at the 
end of the twentieth year (the beginning of the twenty-first year) that the value of 
$76>534 is $34,930.10, and hence the value of $76,534,000 would be 1,000 times $34,930.10 
or $34,930,100. 

This latter amount, $34,930,100, is the present value or the single premium at 
a ge 35 of $76,534,000 payable at the end of 20 years. All of the living members at 
the beginning of each of the 20 years must contribute toward the payment of the 
endowment of $76,534,000, and by reference to column 2 of Exhibit 2 it is seen that 
the survivors would contribute at $1.00 each the sum of $1,714,827, the present value 
of which would be $1,225,504.50. 

Dividing the single premium for the pure endowment, $34,930,100, by the above 
"temporary annuity" of $1,225,504.50, we obtain $28.50 as the required net annual 
level premium per $1,000 for the pure endowment insurance. 

Adding $28.50 to the annual premium for 20-year term, $8.28, we have $36.78 
as the required annual premium per $1,000 for the endowment insurance at age 35. 

As stated, the level annual premium of $8.28 per $1,000 paid by each of the sur- 
vivors beginning with 92,215 entrants at age 35, will provide for the total of $15,681,000 
of death claims which are expected to mature during the 20 years, while the level 
annual premium of $28.50 will provide for the 76,534 endowments which are expected 
to mature at the end of the 20 years, and of course the sum of these two level 
annual premiums, $36.78, will provide for the death claims that mature during the 
20 years, and also the endowments which mature at the end of the 20 years. 

From the above it will be appreciated that Exhibits 1 and 2 give the basis for the 
determination of level annual premiums to provide for death benefits and endowments 
under many forms of contracts. Similar columns to those given in Exhibits 1 and 2 
are prepared which facilitate the computation of contribution rates, and these are 
known as "commutation columns," which hereafter will be explained. 



175 

GENERAL STATEMENT. 

For emphasis, I will restate some of the general propositions which have been 
illustrated. 

i. The single premium for insurance is the present value of the promised death 
benefits. 

2. The single premium for insurance, at the inception of the contract, is equal to 
the present value of the future level annual contribution. 

3. The single premium for insurance divided by the single premium for an 
annuity will give the level annual premium to provide for the promised death 
benefit. 

4. The mortality table to be used in the computation of the single premium for 
insurance and the single premium for annuities, may be constructed from any reliable 
and sufficient data derived from the single or combined experience of insurance 
organizations. Since the values are derived from the numbers living and numbers 
dying according to the actual past experience of organizations, the result of computa- 
tions must reflect what will be anticipated in the future experience, and managers of 
such organizations will make a grievous error if they are not guided by results 
obtained as hereinbefore indicated. 

5. The level annual premium is obtained without regard to any division into 
"mortality" and "reserve" elements. It is a fallacy to suppose that the "reserve'' 
and "mortality" elements are separately computed. The separation of the net level 
annual rate into the "mortality element" and the "reserve element" is a fiction in 
so far as the computation of the level rate is concerned. The reserve accumulation 
is ascertained after the net level annual contribution rate has been determined. 

ANOTHER METHOD OF COMPUTATION. 

It has been suggested that the explanation of the methods for the determination 
of single and annual premiums cannot be made too clear, and following this sug- 
gestion I submit another method of computation by the use of the "probabilities of 
living" and "probabilities of dying," instead of the "number living" and "number 
dying." 4 

Referring to the National Fraternal Congress Mortality Table at age 35, the 
number living is found to be 92,215, and the number dying during the year of age, 
35-36, is 567. By dividing the number living into the number dying the "probability 
of dying" in the first year is found to be .006149. 

The number dying in the next year of age, 36-37, is 578. By dividing 92,215, the 
number living at age 35, into 578, the number dying at age 36, we obtain .006268 as 
the "probability of dying" in the second year after entry at age 35. 

The number dying at age 37 is recorded as 591, and dividing this by 92,215, the 
number living at age 35, we find the "probability of dying," .006409, in the third year 
after entry at age 35. 

By dividing the number 92,215, living at age 35, into the number dying at any 
advanced age, the "probability of dying" in the year at that advanced age can be 
obtained. 

The probability of dying in the current year is obtained by dividing the number 
living at the beginning of the current year into the number dying during the 
current year of age — as 567 divided by 92,215. In life insurance the probabilities of 
dying within the current year at the different ages are employed to determine the 
current yearly costs of protection as hereinbefore shown as "Natural Premiums." 



176 

The probability of dying in the first year, or the second, or the third, or any 
other year after entry is made the basis for the computation of the single premium 
for insurance, the probabilities of dying in the respective years being assumed as 
the anticipated yearly costs of protection for those years. 

That is to say, the probability of dying in the first year being .006149 (as above), 
on the basis of $1,000 it can be assumed that $6,149 would be the year's cost to the 
society for assuming the risk of paying $1,000 in the event of death during the 
current year. 

It has also been shown that .006268 is the probability at age 35 of dying in the 
second year, and the society could accept $6,268 as the expected cost for the risk 
on $1,000 in the second year of insurance. 

And the society could accept $6,409 as the cost for the risk in the third year, 
if the payment were made in advance at age 35 (without discount). 

If the member waited until he reached age 36, then the current cost for the 
year 37-38 would be $6,490, instead of $6,409 where he made an advance arrange- 
ment at age 35 for the insurance in the third year. 

However, if the insurant desired to make this advance contract, yearly costs 
could be discounted in like manner to the discounting of the yearly instalments 
of claims, and the sum of these discounted values would be the Single Premium for 
the Insurance. The process follows, assuming age of entry 35, mortality according 
to the National Fraternal Congress Table and interest at four per cent : 



(1) 


(2) 


(3) 


$ 6.149 X 


.961538 = 


$ 5.9122 


6.268 X 


.924556 = 


5.7951 


6.409 X 


.888996 = 


5.6975 


6.572 X 


.854804 = 


5.6174 


6.745 X 


.821927 = 


5.5440 


6.940 X 


.790315 = 


5.4850 


7.157 X 


.759918 = 


5.4389 


7.407 X 


.730690 = 


5.4119 


7.678 X 


.702587 = 


5.3943 


7.960 X 


.675564 = 


5.3773 


$69,285 


155.6736 



Column 1 gives the Insurance 
Cost, derived from the Probability 
of dying during ten years. 

Column 2 gives the present 
value of One Dollar due in 1, 2, 
etc., years, at 4% Interest. 

Column 3 gives the discounted 
values of the Cost of Insurance, 
the sum of which is ($55.6736) the 
Present Value of all of these dis- 
counted Costs, being the Single 
Premium or Payment for $1,000 
Protection for 10 years. 

That this one Payment of $55.- 
6736 is sufficient to meet the. In- 



Single Premium, age 35, 10 years Insurance . . $55 . 674 

Interest for 1 year at 4% 2.227 

Premium and Interest end of 1st year $57 .901 

Insurance Cost 1st year 6 . 149 

Single Premium Reserve end 1st year $51 .752 

Interest for 2d year at 4% 2.070 

Premium Reserve and Interest end 2d year . . $53 . 822 

Insurance Cost for the 2d year 6 . 268 

Premium Reserve end of 2d year $47 . 554 

Interest for the 3d year at 4% 1.902 

Premium Reserve and Interest end 3d year . . . $49 . 456 

Insurance Cost for the 3d year 6 . 409 

Premium Reserve at end of 3d year $43 .047 

Interest for the 4th year at 4% 1.722 

Premium Reserve and Interest end 4th year. .$44,769 

Insurance Cost for 4th year 6.572 

Premium Reserve end of 4th year $38 . 197 

Interest for the 5th year 1 . 528 

Premium Reserve and Interest end of 5th year . $39 . 725 

Insurance Cost for the 5th year 6 . 745 

Premium Reserve end of 5th year $32 .980 

Interest for the 6th year 1.319 

Premium Reserve and Interest end 6th year. .$34,299 

Insurance Cost for the 6th year 6.94 

Premium Reserve end of 6th year $27 . 359 

Interest for the 7th year 1 ■ 094 

Premium Reserve and Interest end 7th year. .$28,453 

Insurance Cost for 7th year 7.157 

Premium Reserve end of 7th year $21 .296 



177 



surance Costs for the ten years is 


Interest for the 8th year 


.$ 852 


demonstrated by the accompany- 
ing calculation. 


Premium Reserve and Interest end 8th year . 

Insurance Cost for the 8th year 

Premium Reserve end of 8th year 

Interest for the 9th year 


.$22,148 
. 7.407 

.$14,741 
.590 




Premium Reserve and Interest end 9th year . 
Insurance Cost for the 9th year 


.$15,331 

. 7.678 




Premium Reserve end of 9th year 

Interest for the 10th year 


.$ 7.653 
.306 




Premium Reserve and Interest end 10th year . 
Insurance Cost for the 10th year 


.$ 7.959 
. 7.960 




Termination of the 10 years* Protection 


.$ 0.000 



The foregoing computation and demonstration are based on a single insurance of 
$i,ooo, which is entirely theoretical in treatment and not possible of practical ex- 
emplification. However, if 92,215 persons are taken for the demonstration, the single 
premium of 92,215 times $55.6736 can be proved adequate for the payment of claims, 
the latter being determined by the death ratios shown in the Mortality Table in the 
column of "Probabilities of Dying." This entire sum would be improved at 4 per 
cent interest for the first year and $567,000 in claims deducted; then improve the 
remainder at 4 per cent for one year and deduct $578,000; improve the remainder for 
the third year and deduct $591,000; and thus continuing for the ten years it will be 
found that the total of $6,389,000 of claims has been provided for. 

The "probabilities of living" to the end of the first, second, third and so forth 
years, are readily obtained and discounted under similar treatment to that shown 
for the "probabilities of dying" in the first, second, third and so forth years, and 
the result will be the single premiums for a ten-year Annuity $8.2048, and being 
divided into the Single Premium for the 10-year term insurance ($55.6736) will 
produce the ten-year term Level Annual Contribution Rate of $6.7855 to provide for 
the promised $1,000 death benefit, if death occur within the ten years. 

Level annual rates for whole life and other forms of contracts could likewise be 
obtained. 



COMPUTATION WITH LAPSE FACTOR CONSIDERED. 

There prevails a general impression that considerable reduction in the rates of 
contribution can be made, if allowance is made for gains from excess contribu- 
tions of members who lapse or become suspended. In order to show what re- 
duction may be anticipated, I have taken the select lapse experience of a very large 
society, for entrants at age 35, and have constructed four tables similar to those 
already given, save in the particular of using the lapse rate in diminishing the 
amount of protection from year to year. That is to say, the insurance in force at 
the beginning of the year is not only decreased by the amount of death claims 
during the year, but also by the amount terminated by lapse. 

After the full explanation made of the foregoing tables, it is unnecessary to enter 
into any detailed discussion of the following exhibits, 3, 4, 5 and 6. 

I have assumed such an amount of insurance at the beginning of the first year 
as to produce at the end of the fifteenth year the same amount of insurance as 
found in Exhibit 1 at the end of the fifteenth year. In Exhibit 1 the original 
amount of protection was $92,215,000, which diminished by death claims during 



178 

fifteen years left at the beginning of the sixteenth year $81,702,000. At the begin- 
ning of the first year in column 2 of Exhibit 3 the amount of protection is $181,- 
452,000, which being diminished during fifteen years by deaths and lapses is reduced 
to $81,702,000 at the beginning of the sixteenth year. By this arrangement there is 
an agreement in the amounts of protection at the beginning of the sixteenth year 
of Exhibits 1 and 3. Likewise, after the fifteenth year, all of the items in all of 
the columns are the same. 

From Exhibit 3 it will be seen that during the first 15 years $86,697,000 of pro- 
tection are terminated by lapse or suspension, while during the 64 years $94,755,000 
are terminated by death. Assuming that the level rate of contribution for entry age 
is in excess of current yearly costs of protection, then it is evident there is a gain 
to the surviving and persistent members from the forfeitures of excess contributions 
by those members who lapse. That this gain has been exaggerated by the estimates 
of those who favor discounting contributions in anticipation of gains from for- 
feitures can be demonstrated from a comparison of the two sets of tables re- 
spectively constructed with and without consideration of the lapse factor. 

Protection assumed with lapse. . . $181,452,000 

Protection assumed without lapse 92,215,000 

Excess protection at risk '....$ 89,237,000 

Total claims with lapse .$ 94,755,000 

Total claims without lapse 92,215,000 



Excess claims with lapse $ 2 , 540 , 000 

Total contributions with lapse $ 3,547,005 

Total contributions without lapse 3 , 167 , 619 



Total excess with lapse $ 379 , 386 

From the above it will be noted that with $181,452,000 of protection, the sum of 
the yearly installments of contributions, on the basis of $1.00 per $1,000 of protection, 
is only $379,386 in excess of the contributions realized on the same basis from $92,- 
215,000 of protection. 

Starting out with almost double the amount of protection it would seem that a 
very much greater excess in contributions would be realized than shown in the 
above comparison, with and without the lapse factor. The reason for the small 
excess in contribution is that the great bulk of the lapses is in the early years of 
insurance. In the sixth column of Exhibit 3 it will be noted that $22,921,000 is 
terminated by lapse in the second year of insurance. In the first year of insurance 
$9,544,000 is terminated by lapse, notwithstanding the fact that the average exposure 
in the first year is only from three to six months for those who lapse. In the third 
year of insurance $12,921,000 is terminated by lapse. 

In the first five years of insurance there are terminated by lapse $72,682,000 of 
the entire $86,697,000 of terminations. 

While the average lapse rate for the entire membership of a society may be 
approximately uniform from year to year, when there is no unusual disturbance of 
this average uniformity in the terminations by lapse, yet this fact does not give 
any indication of the gains which may be expected from forfeitures by such termi- 
nations. The experience of every life insurance organization shows that after the 
tenth or fifteenth year lapses cease amongst the original entrants ; provided there have 



179 

been level contributions rates from ages of entry. Under the assessment plan mem- 
bers at advanced ages, after 20, 25, and 30 years of membership, lapse in large num- 
bers, and the heavy lapse rate materially increases the death rate. This fact can 
be noted by reference to the experience of the 43 societies. The fact that there is 
a continuous and comparatively regular rate of lapse amongst the new entrants tends 
to mislead those persons who will insist upon drawing conclusions from averages. 

A careful study of the following four tables should impress upon those who 
have favored advance reductions in rates of contributions by anticipation of gains 
from forfeitures the fact that this reduction must be made with extreme care and 
conservatism. 

Annual Premiums Reduced by Forfeiture. 

From column 4 of Exhibit 4 we find the present value of the yearly instalments 
of claims, or "Single Premium," for $181,452,000 of protection to be $30,013,845, while 
the present value of the yearly instalments of contributions is $2,018,413. 

Dividing $30,013,845 by $2,018,413, we obtain the annual level premium per $1,000 
of whole life protection to be $14.87, as against $16.62 without considering the lapse 
factor, being an annual difference of $1.75, which is the reduction in premium per 
$1,000 on account of gains from forfeitures. 

In order to indicate the effect of the gains from lapses, the following comparisons 
are submitted : 

15-YEAR TERM. 

Without lapse factor $ 7.46 

With lapse factor 7. 18 

20- YEAR TERM. 

Without lapse $ 8 . 28 

With lapse 7 . 87 

TERM TO AGE 70. 

Without lapse $12 . 04 

With lapse 11.03 

ORDINARY WHOLE LIFE. 

Without lapse $16 . 62 

With lapse 14 . 87 

20-PAY LIFE. 

Without lapse $22 . 70 

With lapse 19.12 

PAYMENTS LIMITED TO AGE 70. 

Without lapse $17 . 62 

With lapse 15.61 

15-YEAR ENDOWMENT. 

Without lapse $51 . 92 

With lapse 40.43 

20-YEAR ENDOWMENT. 

Without lapse -. $36 . 78 

With lapse 30.72 

ENDOWMENT AT AGE 70. 

Without lapse $19.96 

With lapse 17 . 53 



EXHIBIT III. 



Years of 
Insurance. 



Insurance at Begin- 
ning of Years. 



Probability ot 
Dying. 



Yearly Instalments 
of Death Claims. 



Rate. 



Yearly Terminations 
By Lapse. 



(1) 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 
61 
62 
63 



(2) 

$181,452,000 

170,792,000 

146,794,000 

132,920,000 

122,429,000 

113,887,000 

107,151,000 

101,640,000 

97,010,000 

92,844,000 

89,651,000 

87,213,000 

85,205,000 

83,843,000 

82,696,000 

81,702,000 

80,767,000 

79,786,000 

78,757,000 

77,674,000 

76,534,000 

75,332,000 

74,062,000 

72,720,000 

71,302,000 

69,801,000 

68,213,000 

66,532,000 

64,754,000 

62,874,000 

60,889,000 

58,795,000 

56,589,000 

54,271,000 

51,841,000 

49,302,000 

46,657,000 

43,913,000 

41,081,000 

38,172,000 

35,203,000 

32,194,000 

29,168,000 

26,152,000 

23,175,000 

20,270,000 

17,471,000 

14,812,000 

12,327,000 

10,047,000 

7,997,000 

6,197,000 

4,658,000 

3,381,000 

2,358,000 

1,570,000 

991,000 

587,000 

323,000 

162,000 

73,000 

29,000 

10,000 



(3) 
.0061487 
.0063067 
.0064395 
.0066977 
.0069209 
.0071708 
.0074483 
.0077657 
.0081129 
.0084797 
.0088668 
.0092870 
.0097538 
.0102693 
.0108238 
.0114440 
.0121460 
.0128970 
.0137512 
.0146767 
.0157054 
.0168587 
.0181200 
.0194994 
.0210513 
.0227504 
.0246434 
.0267240 
.0290330 
.0315711 
.0343904 
.0375202 
.0409620 
.0447753 
.0489767 
.0536489 
.0588122 
.0644912 
.0708113 
.0777795 
.0854757 
.0939927 
.1034010 
.1138345 
. 1253506 
. 1380858 
.1521951 
. 1677694 
. 1849599 
.2040410 
.2250844 
.2483460 
.2741520 
.3025732 
.3341815 
.3687898 
.4076690 
.4497445 
.4984520 
.5493827 
.6027397 
.6551724 
.7000000 
innrtnnnn 



(4) 

$ 1,116,000 

1,077,000 

953,000 

890,000 

847,000 

816,000 

798,000 

790,000 

787,000 

787,000 

795,000 

810,000 

831,000 

861,000 

895,000 

935,000 

981,000 

1,029,000 

1,083,000 

1,140,000 

1,202,000 

1,270,000 

1,342,000 

1,418,000 

1,501,000 

1,588,000 

1,681,000 

1,778,000 

1,880,000 

1,985,000 

2,094,000 

2,206,000 

2,318,000 

2,430,000 

2,539,000 

2,645,000 

2,744,000 

2,832,000 

2,909,000 

2,969,000 

3,009,000 

3,026,000 

3,016,000 

2,977,000 

2,905,000 

2,799,000 

2,659,000 

2,485,000 

2,280,000 

2,050,000 

1,800,000 

1,539,000 

1,277,000 

1,023,000 

788,000 

579,000 

404,000 

264,000 

161,000 

89,000 

44,000 

19,000 

7,000 

2 nnn 



(5) 
.05260 
.13420 
.08802 
.07223 
.06285 
.05198 
.04398 
.03778 
.03484 
.02591 
.01832 
.01313 
.00624 
.00341 
.00120 



(6) 

9,544,000 

22,921,000 

12,921,000 

9,601,000 

7,695,000 

5,920,000 

4,713,000 

3,840,000 

3,379,000 

2,406,000 

1,643,000 

1,198,000 

531,000 

286,000 

99,000 



EXHIBIT IV. 



Yearly Instalments 
of Claims. 



Present Value of $1.00 
Due n Years Hence. 



Present Value of Instalments of Death 
Claims 



(2) 


(3) 


(4) 


$ 1,116,000 


.961538 


$ 1,073,100.00 


1,077,000 


.924556 


995,750.00 


953,000 


.888996 


847,210.00 


890,000 


.854804 


760,780.00 


847,000 


.821927 


696,160.00 


816,000 


.790315 


644,900.00 


798,000 


.759918 


606,420.00 


790,000 


.730690 


577,240.00 


787,000 


.702587 


552,930.00 


787,000 


.675564 


531,670.00 


795,000 


.649581 


516,420.00 


810,000 


.624597 


505,930.00 


831,000 


.600574 


499,080.00 


861,000 


.577475 


497,200.00 


895,000 


.555265 


496,960.00—$ 9,801,750.00 


935,000 


.533908 


499,210.00 


981,000 


.513373 


503,620.00 


1,029,000 


.493628 


507,950.00 


1,083,000 


.474642 


514,040.00 


1,140,000 


.456387 


520,270.00— 12,346,840.00 


1,202,000 


.438834 


527,470.00 


1,270,000 


.421955 


535,880.00 


1,342,000 


.405726 


544,480.00 


1,418,000 


.390121 


553,200.00 


1,501,000 


.375117 


563,050.00 


1,588,000 


.360689 


572,770.00 


1,681,000 


.346817 


583,000.00 


1,778,000 


.333477 


592,910.00 


1,880,000 


.320651 


602,820.00 


1,985,000 


.308319 


612,010.00 


2,094,000 


.296460 


620,800.00 


2,206,000 


.285058 


628,850.00 


2,318,000 


.274094 


635,350.00 


2,430,000 


.263552 


640,440.00 


2,539,000 


.253415 


643,410.00— 21,203,280.00 


2,645,000 


.243669 


644,510.00 


2,744,000 


.234297 


642,910.00 


2,832,000 


.225285 


638,000.00 


2,909,000 


.216621 


630,140.00 


2,969,000 


.208289 


618,420.00 


3,009,000 


.200278 


602,630.00 


3,026,000 


.192575 


582,730.00 


3,016,000 


.185168 


558,470.00 


2,977,000 


. 178046 


530,040.00 


2,905,000 


.171198 


497,340.00 


2,799,000 


.164614 


460,750.00 


2,659,000 


.158283 


420,970.00 


2,485,000 


.152195 


378,210.00 


2,280,000 


.146341 


333,660.00 


2,050,000 


.140713 


288,460.00 


1,800,000 


.135301 


243,540.00 


1,539,000 


.130097 


200,220.00 


1,277,000 


. 125093 


159,740.00 


1,023,000 


.120282 


123,050.00 


788,000 


.115656 


91,138.00 


579,000 


.111207 


64,389.00 


404,000 


.106930 


43,200.00 


264,000 


.102817 


27,144.00 


161,000 


.098863 


15,917.00 


89,000 


.095060 


8,460.40 


44,000 


.091404 


4,021.80 


19,000 


.087889 


1,669.90 


7,000 


.084508 


591.56 


3,000 


.081258 


243.78 



EXHIBIT V. 



Insurance 


Probability of 
Living Less 
Probability 
of Lapse. 


Years of 
Insurance. 


Insurance at Beginning 


Assumed Annual 


Yearly Instal- 


Protection. 


of Years Subject to 
Contributions. 


Premium Paid 
in Advance. 


ments of 
Contributions. 


(1) 


(2) 


(3) 


(4) 


(5) 


(6) 


$181,452,000 


.9412513 


1 


$181,452,000 


$1.00 


$181,452 


181,452,000 


.8594933 


2 


170,792, 


000 


1.00 


170 


792 


170,792,000 


.9054905 


3 


146,794, 


000 


1.00 


146 


794 


146,794,000 


.9210723 


4 


132,920 


000 


1.00 


132 


920 


132,920,000 


.9302291 


5 


122,429 


000 


1.00 


122 


429 


122,429,000 


.9408492 


6 


113,887 


000 


1.00 


113 


887 


113,887,000 


.9485717 


7 


107,151 


000 


1.00 


107 


151 


107,151,000 


.9544543 


8 


101,640 


000 


1.00 


101 


640 


101,640,000 


.9570471 


9 


97,010 


000 


1.00 


97 


010 


97,010,000 


.9656103 


10 


92,844 


000 


1.00 


92 


844 


92,844,000 


.9728132 


11 


89,651 


000 


1.00 


89 


651 


89,651,000 


.9769830 


12 


87,213 


000 


1.00 


87 


213 


87,213,000 


.9840062 


13 


85,205 


000 


1.00 


85 


205 


85,205,000 


.9863207 


14 


83,843 


000 


1.00 


* 83 


843 


83,843,000 


.9879762 


15 


82,696 


000 


1.00 


82 


696 


82,696,000 


.9891762 


16 


81,702 


000 


1.00 


81 


702 


81,702,000 


.9885560 


17 


80,767 


000 


1.00 


80 


767 


80,767,000 


.9878540 


18 


79,786 


000 


1.00 


79 


786 


79,786,000 


.9871030 


19 


78,757 


000 


1.00 


78 


757 


78,757,000 


.9862488 


20 


77,674 


000 


1.00 


77 


674 


77,674,000 


.9853233 


21 


76,534 


000 


1.00 


76 


534 


76,534,000 


.9842946 


22 


75,332 


000 


1.00 


75 


,332 


75,332,000 


.9831413 


23 


74,062 


000 


1.00 


74 


,062 


74,062,000 


.9318800 


24 


72,720 


000 


1.00 


72 


,720 


72,720,000 


.9805006 


25 


71,302 


000 


1.00 


71 


,302 


71,302,000 


.9789487 


26 


69,801 


000 


1.00 


69 


,801 


69,801,000 


.9772496 


27 


68,213 


000 


1.00 


68 


,213 


68,213,000 


.9753566 


28 


66,532 


000 


1.00 


66 


,532 


66,532,000 


.9732760 


29 


64,754 


000 


1.00 


64 


,754 


64,754,000 


.9709670 


30 


62,874 


000 


1.00 


62 


874 


62,874,000 


.9684289 


31 


60,889 


000 


1.00 


60 


889 


60,889,000 


.9656096 


32 


58,795 


000 


1.00 


58 


,795 


58,795,000 


.9624798 


33 


56,589 


000 


1.00 


56 


589 


56,589,000 


.9590380 


34 


54,271 


000 


1.00 


54 


271 


54,271,000 


.9552247 


35 


51,841 


000 


1.00 


51 


841 


51,841,000 


.9510233 


36 


49,302 


000 


1.00 


49 


302 


49,302,000 


.9463511 


37 


46,657 


,000 


1.00 


46 


657 


46,657,000 


.9411878 


38 


43,913 


000 


1.00 


43 


913 


43,913,000 


.9355088 


39 


41,081 


,000 


1.00 


41 


081 


41,081,000 


.9291887 


40 


38,172 


000 


1.00 


38 


172 


38,172,000 


.9222205 


41 


35,203 


,000 


1.00 


35 


203 


35,203,000 


.9145243 


42 


32,194 


,000 


1.00 


32 


194 


32,194,000 


.9060073 ' 


43 


29,168 


,000 


1.00 


29 


168 


29,168,000 


.8965990 


44 


26,152 


,000 


1.00 


26 


152 


26,152,000 


.8861655 


45 


23,175 


,000 


1.00 


23 


175 


23,175,000 


.8746494 


46 


20,270 


,000 


1.00 


20 


270 


20,270,000 


.8619142 


47 


17,471 


,000 


1.00 


17 


471 


17,471,000 


.8478049 


48 


14,812 


,000 


1.00 


14 


812 


14,812,000 


. 83223(H) 


49 


12,327 


,000 


1.00 


12 


327 


12,327,000 


.8150401 


50 


10,047 


,000 


1.00 


10 


047 


10,047,000 


.7959590 


51 


7,997 


,000 


1.00 


7 


997 


7,997,000 


.7749156 


52 


6,197 


,000 


1.00 


6 


197 


6,197,000 


.7.") 16540 


53 


4,658 


,000 


1.00 


4 


658 


4,658,000 


.7258480 


54 


3,381 


,000 


1.00 


3 


381 


3,381,000 


.6974268 


55 


2,358 


,000 


1.00 


2 


358 


2,358,000 


.6658185 


56 


1,570 


,000 


1.00 


1 


570 


1,570,000 


.6312102 


57 


991 


,000 


1.00 


991 


991,000 


.5923310 


58 


5S7 


,000 


1.00 


587 


587,000 


.5502555 


59 


323 


,000 


1.00 


323 


323,000 


.5015480 


60 


162 


,000 


1.00 


162 


162,000 


.4506173 


61 


73 


,000 


1.00 


73 


73,000 


.3972603 


62 


29 


,000 


1.00 


29 


29,000 


.3448276 


63 


10 


,000 


1.00 


10 


10.000 


.3000000 


64 


3 


,000 


1.00 




3 



EXHIBIT VI. 



Years of 


Amount of Annual 


Present Value of $1.00 


Present Value of Yearly Instalments of 


iDsurance. 


Contributions. 


Due n Years Hence. 


Contributions. 


(1) 


(2) 


(3) 


(4) 


1 


$181,452 


1.000000 


$ 181,452.00 


2 


170,792 


.961538 


164,223.00 


3 


146,794 


.924556 


135,719.00 


4 


132,920 


.888996 


118,166.00 


5 


122,429 


.854804 


104,635.00 


6 


113,887 


.821927 


93,606.80 


7 


107,151 


.790315 


84,682.70 


8 


101,640 


.759918 


77,237.90 


9 


97,010 


.730690 


70,884.30 


10 


92,844 


.702587 


65,230.70 


11 


89,651 


.675564 


60,564.80 


12 


.87,213 


.649581 


56,651.90 


13 


85,205 


.624597 


53,219.10 


14 


83,843 


.600574 


50,354.00 


15 


82,696 


.577475 


47,755.00—$ 1,364,382.20 


16 


81,702 


.555265 


45,367.30 


17 


80,767 


.533908 


43,123.20 


18 


79,786 


.513373 


40,960.90 


19 


78,757 


.493628 


38,877.70 


20 


77,674 


.474642 


36,868.40— 1,569,579.70 


21 


76,534 


.456387 


34,930.10 


22 


75,332 


.438834 


33,059.30 


23 


74,062 


.421955 


31,251.90 


24 


72,720 


.405726 


29,505.40 


25 


71,302 


.390121 


27,817.40 


26 


69,801 


.375117 


26,184.40 


27 


68,213 


.360689 


24,604.50 


28 


66,532 


.346817 


23,075.20 


29 


64,754 


.333477 


21,594.80 


30 


62,874 


.320651 


20,161.40 


31 


60,889 


.308319 


18,773.90 


32 


58,795 


.296460 


17,431.00 


33 


56,589 


.285058 


16,131.80 


34 


54,271 


.274094 


14,875.90 


35 


51,841 


.263552 


13,663.30— 1,922,640.00 


36 


49,302 


.253415 


12,494.10 


37 


46,657 


.243669 


11,369.30 


38 


43,913 


.234297 


10,289.10 


39 


41,081 


.225285 


9,255.40 


40 


38,172 


.216621 


8,269.20 


41 


35,203 


.208289 


7,332.70 


42 


32,194 


.200278 


6,448.00 


43 


29,168 


.192575 


5,617.30 


44 


26,152 


.185168 


4,842.80 


45 


23,175 


.178046 


4,126.40 


46 


20,270 


.171198 


3,470.40 


47 


17,471 


.164614 


2,876.10 


48 


14,812 


.158283 


2,344.60 


. 49 


12,327 


.152195 


1,876.20 


50 


10,047 


.146341 


1,470.40 


51 


7,997 


.140713 


1,125.30 


52 


6,197 


. 135301 


838.50 


53 


4,658 


. 130097 


606.00 


54 


3,381 


.125093 


423.00 


55 


2,358 


.120282 


283.60 


56 


1,570 


.115656 


181.60 


57 


991 


.111207 


110.20 


58 


587 


.106930 


62.80 


59 


323 


.102817 


33.20 


60 


162 


.098863 


16.00 


61 


73 


.095060 


6.90 


62 


29 


.091404 


2.70 


63 


10 


.087889 


.88 


64 


3 


.084508 


.26 









184 

FEASIBILITY OF EMPLOYING THE LAPSE FACTOR. 

It is very reasonably contended that the immediate need of those who generally 
seek protection in fraternal orders is to bring within their means the contributions 
for sufficiently large benefits to support their families. To do this, it is argued that 
every advantage must be taken by which the rate of contribution can be reduced. 

For illustration, it may be stated that the net annual level premium at age 35 
for $1,000 of protection according to the National Fraternal Congress Table of 
Mortality, is $29.11, where the rate of mortality alone is considered. However, if it 
is assumed that three per cent interest can be earned on the excess contributions 
over current insurance cost, then the premium can be reduced to $18.91. If three 
and one-half per cent interest be assumed, the rate of contribution need be only 
$17.71, and with a four per cent interest assumption, the rate would be $16.62. The 
higher the rate of interest, the greater the reduction in premium. 

No one will deny the feasibility, practicability, or desirability of allowing for 
some interest earning in the computation of rates of contribution. The earnings from 
interest go to increase the accumulation, and avoid the need for the members to 
contribute so largely toward the principal of the required accumulation to maintain a 
level pemium. The receipts from interest come from other sources than from the 
contributions of members for whose benefit these receipts are used. 

On the assumption of three per cent interest earnings, there has been no hesitancy 
about applying that earning to an advance reduction of the rate of contribution 
from $29.11 to $18.91. If it can be assumed that a sufficient amount can be de- 
pended upon from forfeitures of withdrawing members to equal • ten per cent of 
the contribution of persistent members, then why should not this amount be anticipated 
in the computation of premiums, and ten per cent at once deducted from the $18.91 
rate, the $17.71, or $16.62 rates? 

It has been shown that mathematical computations can be made to include the 
lapse factor, on the same principle as when including the mortality and interest 
factors, when a lapse rate is given. And by assuming the lapse rate of a large 
society for entry age 35 the contribution rates have been computed and given in 
comparison with contributions where lapse is not considered. The percentages of 
decrease are as follows : 

On 15-year term 4% 

On 20-year term 5% 

On term to age 70 9% 

On whole life 10% 

On limited pay to age 70 •. 13% 

On endowment to age 70 13% 

On 20-limited pay 15% 

On 20-year endowment 17% 

On 15-year endowment 20% 

The above reductions in contribution rates, for the several forms of certificates, 
were obtained upon the assumption of the same lapse rate under each form. This 
is not true. The lapse is very much larger on term than whole life certificates. Is 
larger on whole life without than with profit. Is larger on any whole life form 
than on endowment certificates. Hence if the lapse factor were employed, different 
rates would be necessary for different forms of contracts ; otherwise the percentage 
reduction is exaggerated. 

Admitting, however, that the introduction of the lapse factor would reduce the 



185 

contribution rate in anticipation of gains from forfeitures by lapse, then why not 
employ it in the computation of rates, even though necessitating different assumptions 
for different societies and for different forms of contracts in the same society. 

A writer in a recent report on the experience of a prominent fraternal beneficiary 
society has strongly advocated the use of the lapse factor in premium calculations, 
and vigorously combats the general objections almost universally urged by actuaries 
against its employment. 

It is well known that I take a different view of the lapse factor, and it is the 
present purpose to give the facts upon which I have based my conclusions. I have 
no partiality nor prejudice in the matter, and have no pet theory to sustain. The 
facts in the case have formed for me my opinion. 

In the outset the acknowledgment is frankly made that no one can possibly foretell 
the actual mortality experience of any society. A fair estimate is the best that 
can be expected in advance. Notwithstanding such admission, I have not hesitated 
to advise the acceptance of some mortality experience as a basis for calculating rates 
of contribution which are to provide for definitely promised benefits. 

It is freely admitted that no one can foretell the interest rate that can be earned 
on money during the next 20, 30, 40 or 50 years, nor can any one certainly predict 
that the funds will always be safely invested, and yet I have unhesitatingly recom- 
mended rates of contribution based upon a definitely assumed rate of interest, and 
upon the presumption that the funds could be securely invested and honestly handled. 

In view of such acknowledgment and admission, why should I hesitate to assume 
some definite lapse rate, based upon some well authenticated experience, and in- 
troduce that into the calculation of premiums, as well as to use the other two un- 
certain factors of mortality and interest rates, to say nothing of the equally uncertain 
condition of safe investment. 

The reason for recommending rates of contribution based upon assumed rates of 
mortality and interest, is because of the close, and usually accurate, estimate that 
can be made of future mortality experience and interest earning, and of the com- 
paratively simple mathematical calculations involved in the use of these two factors. 

The reason for questioning the advisability of the use of the lapse factor is 
because of (a) its uncertainty; (b) its variable and disappointing character; (c) its 
subject to control by the human volition; (d) its effect upon expenses; (e) its effect 
upon the reserve accumulation; (f) the complications incident to making an estimate 
of a future lapse rate from any past experience. 

To indicate how uncertain it would be as a factor in computations, I submit 
the following rates of lapse per 1,000 members, at the given ages, for the societies 
mentioned : 

If the lapse rate of the Ancient Order of United Workmen were assumed for the 



Ages. 


A. 0. of F. 


M. W.ofA. 


R. N. A. 


R. A. 


A. 0. U. W. 


20 


95.0 

65.8 

44.8 

30.1 

17.9 

10.4 

6.1 

3.6 

2.6 


165.7 

126.6 

81.6 

56.7 

43.1 

32.9 

15.3 

5.7 

2.7 


86.4 
62.4 
42.7 
25.0 
25.2 
21.4 
15.4 
7.6 


38.7 
33.4 
27.8 
24.0 
20.2 
16.2 
12.7 
9.3 
6.2 


116.9 


25 

30 

35 


158.7 

103.1 

79.6 


40 


59.5 


45 » 


43.8 


50 

55 


27.7 
12.6 


60 


8.5 







186 



Royal Arcanum, the resulting contributions would be insufficient, measured by the 
Royal Arcanum lapse rate. If the Royal Arcanum's past experience were assumed 
for that and other societies, the reduction in rates of contribution would be so in- 
significant as not to be worth consideration. 

How would it be possible to construct any uniform schedule of rates that would 
conform to these varying rates of secession? 

If there were an exhibit of a larger number of societies, the variance would be 
more striking, and the demonstration more complete of the impossibility of har- 
monizing the differences into a uniform rate of lapse suitable for the different or- 
ganizations. 

An analysis of the experience of each society would disclose a different rate of 
lapse in different localities and in different occupations. The difference due to different 
localities is well established by the following showing of lapse rates in several juris- 
dictions of the Ancient Order of United Workmen : 

A. O. U. W. Lapse Rate in Different Jurisdictions. 



♦ Ages. 


N.Y. 


Cal. 


Mo. 


Mass. 


Pa. 


Ga. 


21 


152.8 


100.0 


266.9 


9.7 


102.8 


219.2 


25 


147.1 


125.8 


201.0 


36.2 


188.8 


388.8 


30 


108.1 


86.6 


128.1 


22.3 


115.7 


238.1 


35 


80.8 


71.7 


97.0 


16.9 


84.2 


187.4 


40 


60.3 


50.3 


78.1 


12.0 


61.3 


162.5 


45 


43.5 


35.6 


53.8 


9.0 


46.4 


115.3 


50 


23.4 


24.8 


29.7 


6.2 


32.4 


77.8 


55 


9.0 


13.5 


11.0 


4.2 


18.7 


16.7 


60 


5.7 


9.5 


8.8 


2.9 


13.3 





The aggregate lapse rate for the thirteen jurisdictions, as given in the first table, 
would not fit any one of the above separate jurisdictions. It would simply be ruinous 
for Massachusetts, since the amount to be realized from forfeitures would not equal 
one-fourth of the assumed gains. The application of such a rate would bring the 
ridiculous result of throwing one of the best managed jurisdictions into the deficiency 
class. 

The following from the recent experience of the Manchester Unity will emphasize 
the effect of locality and occupation, as grouped by its actuary : 

Manchester Unity Lapse Experience Per 1,000 Members. 





Non- Manufacturing. 


Textile. 


Manufacturing (ex-Tex- 
tile) , Mining and 
Metropolitan. 




Rural 
Lodges. 


Urban 
Lodges 


All 
Lodges. 


Rural 
Lodges. 


Urban 
Lodges. 


All 
Lodges. 


Rural 
Lodges. 


Urban 
Lodges. 


All 
Lodges. 


20 


48. 
38. 
25. 


74. 
64. 
39. 


53. 
43. 

28. 


28. 
28. 
22. 


68. 
63. 

48. 


57. 
53. 
40. 


49. 
38. 

27. 


85. 
76. 
55. 


71. 


25 : 


63. 


30 


46. 


35 


17. 


27. 


19. 


14. 


33. 


27. 


25. 


37. 


33. 


40 


12. 


16. 


13. 


12. 


19. 


17. 


12. 


20. 


17. 


45 


9. 


9. 


9. 


8. 


12. 


11. 


8. 


10. 


9. 


50 


5. 


4. 


5. 


3. 


9. 


7. 


7. 


9. 


8. 


55 


5. 


6. 


5. 


2. 


8. 


6. 


5. 


3. 


4. 


60 


2. 


1. 


2. 


2. 


7. 


5. 


2. 


3. 


3. 


65 


3. 


0. 


2. 


2. 


2. 


2. 


0. 


3. 


2. 



187 

The foregoing statistics are from "aggregate" tables, and show the lapse rate at 
each age for all members at that age, without reference to their ages at entry or 
duration of membership. These statistics clearly demonstrate that the larger per cent 
of all lapses is at the low ages, and clearly prove that the material reduction in rates 
of contribution on account of lapses could only be made at the low ages, assuming 
that such statistics could be accepted as conclusive. 

However, the above statistics from "aggregate" tables do not disclose nor discover 
all of the objections which can be urged against the use of lapse rate. When we 
investigate lapse experiences, as given in "select" tables, we find that the larger per- 
centage of lapses not only occur at the young ages, but likewise in the early years 
of membership. 

Of a given number who enter at age 20, many will lapse in the second year, 
until lapse virtually ceases after twelve or fifteen years of membership. Therefore, 
the members who entered at age 20 and attained to age 35 would become persistent, 
and the lapse rate among them would not compare with the lapse rate among members 
in their first year of entry at age 35. 

To instance : The lapse rate of members, who entered at age 20, in the fifteenth 
year of membership, at age 35, by the Modern Woodmen experience, was eight in 
the 1,000. The lapse rate of members who entered at age 35, in the first year of 
membership, was 93 in the 1,000. The "aggregate" lapse rate for all members at 
age 35 is shown to be S7 m the 1,000. 

Assuredly no one will contend that accurate results can be obtained from grouping 
together persons of the same attained age with such a wide difference in rate of 
lapse. This, however, is done when "aggregate" tables are used. To use "select" 
tables would be impracticable, because of the complications introduced into the 
calculation of rates of contribution. 

Some one may say that "select" tables also show different death rates for the 
fifteenth year of members who entered at 35. That is true. The Woodmen ex- 
perience shows a death rate for members who entered at 20, in their fifteenth year 
of membership, at attained age 35, of eight in the 1,000; while for members who 
entered at 35, in the first year of membership, it shows three in the 1,000. The 
"aggregate" death rate for all members at age 35 is six in the 1,000. 

It is also true that when tthe "aggregate" lapse rate is lower than the "select" rate 
for any age, say at 35, it would give a schedule of assessment rates, deduced therefrom, 
on the side of safety. 

While that is true, it must be remembered that the rate of lapse rapidly falls off 
after the second year of membership, the effect of which is only partially disclosed 
in the "aggregate" table, and there must result an error in calculations which will 
be cumulative in character and ultimately end in trouble. The Modern Woodmen ex- 
perience is conveniently at hand, and since it is similar to all other experiences which 
have come under my observation, I give the lapse rate and death rate of that Society 
by membership years, from one to fifteen, for the following sample entry ages (mem- 
bers not admitted above age 45) : 

As before intimated, it might be argued that wrong results would as likely proceed 
from the use of "aggregate" mortality tables as from the "aggregate" method in 
determining lapse rate, for it is seen that the death rate persistently tends to in- 
crease with the years of membership in somewhat the same ratio to the decrease 
in the lapse rate with duration of membership. 

However, it has been found perfectly feasible and absolutely safe to allow for this 
increase in death rate, and to avoid the effect of the medical selection during the 



188 



M. W. of A. Lapse and Mortality Experience Per 1,000. 





2C 


. 


25 




"30 


, 


35 




4C 


. 


45. 


Years 
of Ins. 


























Lapse 


Death 


Lapse 


Death 


Lapse 


Death 


Lapse 


Death 


Lapse 


Death 


Lapse 


Death 




Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


Rate. 


1 


184. 


3.25 


157. 


3.06 


126. 


2.61 


93. 


3.02 


85. 


3.39 


66. 


2.91 


2 


180. 


4.23 


144. 


3.01 


109. 


3.39 


85. 


2.92 


68. 


3.71 


63. 


5.27 


3 


129. 


4.24 


101. 


3.44 


72. 


4.00 


57. 


4.69 


48. 


3.84 


32. 


6.39 


4 


97. 


3.82 


72. 


3.74 


51. 


3.13 


39. 


5.27 


34. 


2.28 


24. 


6.53 


5 


68. 


5.79 


52. 


3.51 


39. 


4.83 


26. 


4.56 


23. 


6.23 


17. 


7.09 


6 


55. 


6.09 


39. 


4.59 


30. 


2.81 


24. 


4.94 


16. 


5.60 


11. 


8.44 


7 


40. 


6.43 


31. 


5.49 


24. 


4.82 


18. 


4.66 


13. 


6.92 


13. 


8.20 


8 


42. 


5.52 


21. 


4.53 


17. 


5.82 


17. 


5.34 


12. 


8.12 


8. 


8.85 


9 


32. 


4.04 


17. 


4.27 


19. 


5.38 


12. 


5.43 


9. 


7.36 


6. 


9.04 


10 


21. 


1.47 


12. 


4.63 


14. 


6.27 


10. 


5.75 


7. 


9.71 


8. 


15.82 


11 


26. 


3.98 


9. 


3.59 


9. 


4.17 


14. 


6.25 


6. 


10.85 


6. 


7.83 


12 


12. 


5.95 


7. 


2.45 


10. 


2.55 


7. 


8.56 


5. 


8.99 


5. 


20.98 


13 


4. 


3.58 


13. 


7.34 


5. 


8.43 


4. 


4.84 


4. 


6.67 




10.96 


14 


14. 


4.65 


3. 


4.09 


8. 


4.35 


9. 


6.20 


5. 


11.58 


"5." 


15.58 


15 


8. 


8.06 


2. 


8.21 


5. 


9.38 


12. 


11.73 


3. 


14.64 


2. 


15.70 



Note.— The above disproves the oft repeated statement that more deaths occur in the earlier than later years 
of insurance. General experiences of other societies are similar to that of the Woodmen. 

first few years of membership by excluding the experience of the first five years, 
when the effect is most pronounced. After this is done, the subsequent "adjustment'' 
further relieves the mortality table from the objections mentioned. Further than this, 
the conservative management and cautious actuary will then adopt some standard 
mortality table as a basis for rates, which is even higher than this adjusted table 
representing the experience of the society in question. 

It may be said that the same conservative and cautious course could be adopted 
in respect of the lapse rate. Assuredly it could ; but the result would be to make 
the reduction in rates of contribution so triflingly small that no one would go to 
the trouble and expense of introducing the lapse factor into premium calculations. 

The only tenable argument to be made in favor of considering the lapse element 
is that material reduction may be had in rates of contribution, in order to bring 
them within the financial ability of poor men. If, when on the safe side, the lapse 
rate is so low as to make insignificant reduction in contributions, then there is no 
sufficient reason for introducing this lapse factor to complicate the calculations and 
disturb the regular reserve values. 

The uncertain and variable nature of the lapse rate is clearly established from 
the lapse experience of life insurance organizations, and it would appear impossible 
to settle upon any uniform schedule of assessment rates when the lapse factor enters 
into their computation. 

If the lapse element is to be considered, evidently each society must be largely, if 
not altogether, controlled in that consideration by its own experience. It would be 
extremely hazardous for a society to rely upon the experienced lapse rate of some 
other society. 

The fact of remaining with or withdrawing from a society is determined by in- 
dividual volition, and the moving cause for the exercise of human volition would be 
impossible to predict by any previous record of its exercise. 

With the representative form under which the societies generally operate, the 
cause might come from political influences or from disagreement between officials, or 



189 

from the pernicious activity of agents and representatives of other organizations, or 
from any one or more of a hundred influences which could operate upon the human 
will — a thing notoriously fickle, changeahlc, and unreliable. 

If each society reduced its rates of contribution in an amount justified by its own 
experience, there would be no uniformity in the resulting schedules. A reference to 
the lapse rate of the Royal Arcanum and the Ancient Order of United Workmen, as 
examples, will indicate the resulting difference in the rates of reduced contribution. 

Were the societies to put out varying schedules, there would be no end of misrep- 
resentation to the public. 

As a practical proposition, it would seem advisable and preferable to agree upon a 
uniform schedule of rates without considering the lapse clement, and then let each 
society return to its members, in optional form, the gains from forfeitures after 
they are realized through actual withdrawals. 

If the return is to be in the way of reducing rates of contribution, the amount 
from forfeitures could be divided, at the end of each year, and the contribution of 
each persistent member reduced by his proportionate share. 

By this method the reduction would be after the fact, and there would be no 
possibility of upsetting calculations by creating deficiencies, as under the method of 
making the reductions beforehand upon guess and estimate. 

The persistent member would receive the same advantage of lapses, and those 
who object to surrender values should be satisfied. Each society would stand upon 
its own record, as it should do ; the members of each would receive all possible benefit 
from forfeitures, because they would share in a division of all the gains from that 
source, and more than that they could not have, even though an over-estimate promised 
more ; withdrawing members would receive no part of their accumulation, and, there- 
fore, would be punished for seceding; and so all of the conditions would be fulfilled 
that are anticipated by those who would risk the danger of estimated and assumed 
reduction before the fad. 

I desire it to be distinctly understood that I have no prejudice against using the 
lapse in constructing tables from which to derive insurance values and premiums. 
I simply have no confidence in the reliability of such tables, because I can find no 
statistics that will justify such confidence. 

I do not believe in laying down any hard and fast rule and undertaking to apply 
it to all cases of readjustment of existing rates of assessment. The conditions of 
societies are widely different in respect of methods of management, plans of opera 
tion, character of membership, and original rates of contribution. Hence the necessity 
of a careful investigation of the affairs of each organization before deciding upon the 
best method for readjustment. 

It is well known that I advised the Readjustment Committee of the Modern 
Woodmen of America to ignore the lapse element in the preparation of rates. How- 
ever, the members of that society had become so accustomed to very low rates of 
contribution that they protested vigorously against the schedules proposed by the 
Readjustment Committee, and, at the suggestion of the Head Consul, I prepared 
another schedule with the lapse factor considered. This schedule was offered to the 
Head Gamp by Delegate Young, under the name of the "Hawes Plan" as a sub- 
stitute for the committee's rates. But the representatives of . the Modern Woodmen 
of America were not willing to accept the concession, and did what so many 



190 

other similar bodies have done, adopted a makeshift, devised on the spur of the 
moment by those wholly ignorant of the true relation between promised contribu- 
tions and promised benefits. 

In such an emergency as that in which the officials of the Modern Woodmen of 
America were placed, during the desperate struggle to put their society upon a 
sound basis, I could favor the trial of rates reduced by an estimated gain from 
forfeitures through lapse. 

I would advise against any such estimate. I have endeavored to support my 
opinion by facts in reference to lapse rates experienced by different organizations, 
and by reference to opinions of the leading actuaries on both sides of the Atlantic. 
It seems to me that the almost unanimous conclusion of the experts should satisfy 
us that resort should only be made to the use of the lapse element in those cases 
of revision of assessment rates where excessive loading is necessary to provide for 
deficiencies of existing old members. It were as well to ignore expert advice altogether 
as to fly in the face of an almost universal opinion against consideration of the lapse 
element in premium calculations. 

I cannot dismiss this part of the discussion without quoting the following from 
Mr. George King's lecture, "Facts, Fallacies and Fancies in Life Insurance" : 

"The company which takes account of discontinuances in calculating its 
premiums, requires to make — and I can prove it by mathematics — a consid- 
erably higher reserve than a company charging the ordinary level premiums. 
Therefore it is utterly fallacious for assessment or natural premium officers 
to argue that because they trust to discontinuances they do not require large 
reserves. A premium calculated to allow for discontinuances is naturally lower 
than the premium calculated for mortality only, because the surrender values 
of the policies which it is assumed will lapse are applied in reduction of 
premium. Now it is found that discontinuances take place in great proportion 
in the early years of the policies, and that when policies have been in ex- 
istence, say ten or fifteen years, discontinuances practically cease. All the dis- 
continuances take place in the early years, and when a man has kept up a 
policy for a certain time he keeps it up to the end. Now, the premium being 
lower than the ordinary level premium, and the risk being the same, and the 
premium being part of the assets relied upon by the office in order to meet the 
claim, it follows that the other part of the assets — namely, the reserves — must 
be increased. So that if the premium is reduced by the application of lapses, 
to lower the premium, then the reserves, on the other hand, must be increased, 
so as to get a perfect balance between the liabilities and assets. Now by these 
simple considerations you can see that a company which trusts to discontinu- 
ances in order to reduce its rates must, if it is to remain permanently solvent, 
make larger reserves than a company which charges the ordinary premium 
based upon mortality only." 



Examples of Discounted Rates. 

I now come to that part of my presentation which should especially hold attention, 
because it deals with the practical side of the subject, as it directly relates to that 
ever-existing condition of securing and losing members, and the expense of field 
work, with some bearing on the effect of competition. To immediately get at the 
pith of the matter, I present a number of schedules of level annual premiums on the 
basis of mortality alone, and on the basis of mortality and lapse considered. Only a 
few sample ages are given : 



191 



Age. 


A. 0. U. W. 

(By Eldridge.) 


P. H. C. 

(By Barnard.) 


I. 0. F. 

(By Ilea.) 


Without Lapse 

(Net.) 


With Lapse 

(Net.) 


Without Lapse 

(Net.) 


With Lapse 

(Net.) 


Without Lapse 
(Gross.) 


With Lapse 

(Gross.) 


2S 

30 
35 
40 
45 
50 


$13.68 
15.00 
19.00 
22.95 
28.16 


$ 9.69 

9.40 

11.58 

14.21 

17.29 


$12.48 

14.64 
17.40 
21.12 
25.92 
32.52 


$10.20 
12.00 
15.00 
18.60 
24.00 
31.20 


$12.03 
14.29 
17.37 
21.70 
28.00 
37.66 


$10.90 
. 13.16 
16.08 
20.36 
26.81 
35.96 











Age. 


ILLUSTRATIVE 
(By I. P. Mantz.) 


ILLUSTRATIVE 

(By Hunter.) 


M. W. of A. 

(By Landis.) 


Without Lapse 

(Net.) 


With Lapse 

(Net.) 


Without Lapse 

(Net.) 


W T itb Lapse 

(Net.) 


Without Lapse 

(Net.) 


With Lapse 

(Net.) 


25. 
30 


$11.91 
13.96 
16.62 
20.11 
24.72 
30.91 
39.36 
51.13 


$10.32*** 
12.08 
14.47 
17.41 
21.88 
26.82 
34.37 
45.96 


$16.25 


$14.56** 


$12.48 
14.64 
17.40 
21.12 
25.92 
32.52 


$11.64* 
13.56 


35 






16.20 


40 
45 


25.89 


23.66 


19.80 
24.60 


50 






32.52 


55 


59.87 


55.25 




60 







NOTE.— ***These rates are based upon a mortality rate according to the National Fraternal Congress Table, and 
upon lapse ratios reported to the nineteenth M. U. B. A. convention. **Double lapse rate here considered. With normal 
lapse rate, the premiums given by Mr. Hunter were, age 25, $15.48; age 40, $24.83; age 60, S57.64. *Seventy-two cents were 
added to these rates at each age to 48 years of age, the same being a "fraternal rate" to maintain a level premium of $30.00 
annually for existing members above 48 years of age. In consequence, the premiums offered with lapse were nearly the same 
as the regular net premiums without lapse. The effect of lapse was not considered above age 47. 



The reduction made by Mr. Eldridge for the Ancient Order of United Workmen, 
from the rate without lapse, is very considerable, because the withdrawals from that 
society were very great prior to 1896, before the old classified plan was adopted. 
The lapse experience investigated by Mr. "Eldridge was prior to 1896. 

The reduction from regular rates made by Mr. Barnard for the Protected Home 
Circle is likewise considerable. Mr. Barnard, in his report to the society, does not 
give the basis for his modification, but it is presumed that he followed the suggestion 
made by Mr. Whiting some years ago. When the rates were prepared for the 
Protected Home Circle, unfortunately the lapse experience of the society was not 
available, and hence it cannot be known whether or not the reduction or modification 
accords with that experience. 

Mr. Rea and Mr. Pipe based the regular and reduced rates of the Independent 
Order of Foresters upon the actual experience of that society, and the reduction is 
not very great. 

Mr. Hunter worked out sample rates for illustration, as was also the case of 
Mr. Mantz. The former took the Hm Table of Mortality and double the normal 
lapse, and the latter used the National Fraternal Congress mortality and the lapse 
ratios of the Mutual Underwriters Benefit Associations. Mr. Landis used the National 



192 

Fraternal Congress rates and discounted them on the basis of the Modern Woodmen 
twenty years' experience. 

The results of these several efforts reflect what might be expected in the way of 
variety were all of the societies of America to have rates prepared with lapse element 
considered. 

The results certainly show that it would be impossible to secure a uniform 
schedule for all of the societies. We must picture the situation from the standpoint 
of a variety of schedules. Then what would be the practical effect of them? 

First. Each society would be forced to make out special reserve values, basq 
their valuations on specially prepared tables, or value upon standard tables modified. 

Second. Each society would be compelled to have its affairs so managed as not 
to have a lapse rate lower than assumed, and hence the officers could not exert 
themselves to the utmost to prevent secessions, but might be forced to cause lapses 
should the members be possessed of an extra confidence beyond that assumed for 
them. 

Third. The great reduction in rates, like those of Mr. Eldridge for the Ancient 
Order of United Workmen, and Mr. Barnard for the Protected Home Circle, would 
require a heavy lapse rate, and in time would require strenuous activity in the field 
in order to replace withdrawing members by new ones to prevent a net loss in 
membership and ultimate dissolution. This strenuosity would call for the sinews of 
war in the shape of more money for extension purposes. This increased demand for 
expense funds would offset the gains from forfeitures, and the management would soon 
be brought to face a deficiency, or be forced to ask for an increase in the expense 
contributions equal to the reduction in net mortality premiums, with the result that the 
society would have rates equal to the regular premiums without lapse but with all 
of the advantages of surrender values. The management could not seek relief in 
preventing lapses, beyond the number assumed, because that would invite insolvency. 
The management must secure enough new members to make good those going out 
by lapse and death, and some additional for healthy growth, otherwise the society 
would go into decay. If any one can work out an advantage from the assumption 
of a high lapse rate in order to obtain low net premiums, it is more than is indicated 
in this presentation, and more than I can see from a practical view of the situation. 



The Insurance Risk. 

The mortality table enables the actuary to determine the risk to death assumed by 
the society on the insured life, which is an increasing risk with increasing age. 

But there are conditions other than age which affect the risk, such as occupation, 
residence and the period of promised protection. 

The added contribution necessary to provide for the extra occupation and resi- 
dence risk is omitted from consideration in the first computation to obtain the rate 
for the death benefit as an ordinary risk. The extra required contribution is separately 
determined. 

But the period of protection must be considered in the first instance, and only 
that portion of the mortality table is employed which corresponds to the period 
covered by the protection from age of entry to the terminating age. 

The society's risk may be increased also by the addition of other than death benefits. 

The promise may include claims on account of accidents, or sickness, or old age, 
the inclusion of any one of which will require an extra contribution over that for 
a death benefit only. 



193 

To provide for accident benefits a level and equal rate for all ages is usual. And 
most of the American companies have a level and equal premium to age 50 for health 
(or sickness) benefits, and a somewhat higher equal rate for ages above 50. However, 
the sickness rate increases with increasing age, and the companies only save them- 
selves from the troubles which have come to the Friendly Societies by reserving the 
right to cancel contracts at their option. 

Recently much interest has been taken in Total Permanent Disability Benefits, and 
I have given tables in respect of them. In 1903 I obtained the first American Dis- 
ability Experience from the Knights of the Maccabees of the World and other So- 
cieties, and from the data constructed the first Total Permanent Disability Tables. 
Since that time I have furnished the statistics to other actuaries who have prepared 
from them elaborate tables in connection with the American Experience Table of 
Mortality. 

For contribution rates for sickness benefits, other than for one-year renewable 
term contracts, the Manchester Unity or Sutton's Tables are employed. 

The day has passed when guessing should be resorted to in the matter of con- 
tributions adequate to provide for promised benefits. 

Mortality, Sickness and Total Permanent Disability Tables are well established 
and, at moderate cost, any insurance organization can have computed contribution 
rates for any character of insurance protection. 

Varying Benefits. 
Not only can level contribution rates be computed for a uniform benefit, but the 
tables enable the actuary to determine the rate for increasing or decreasing benefits. 
In all cases, at the inception of the insurance contract, the present value of the 
future contributions must be equal to the present value of the promised benefits. 
Equity requires and solvency demands this condition. 

The simplest form of contract in respect of assessments is the case of the level 
and uniform contribution rate graded to ages when the payments commence and for 
a uniform benefit payable at death. 

From Exhibits 1 and 2 it is demonstrated that the Present Value of the Promised 
Benefit is equal to the Present Value of the sum insured and is equal to the Singie 
Payment to provide for the Yearly Instalments of Claims. 

From Exhibits 1 and 2 it is demonstrated that, at the inception of the insurance 
contract, the future contributions to provide for the Yearly Instalments of Claims, 
is equal in value to the Single Payment and is equal in value to the Promised Benefit, 
and that the Present Value of the Annual Contribution is obtained from its multipli- 
cation by the Whole Life or Temporary Annuity. 

I have avoided symbols, but for the sake of brevity occasionally they must be used. 
A=The Single Payment, 

= Present Value of Sum Insured, 
a = Present Value of an Annuity, 

= Present Value of $1.00 Paid Annually. 
P = Level Annual Premium, 
= Level Annual Contribution. 
Then commit to memory the following equations and we will have ended the first 
lesson : 

A = PXa, 

= Present Value of Promised Benefits, 
P = A-=-a, 
a = AvP, 

PXa = A, = Present Value of Future Contributions, 
= Present Value of Promised Benefits, 



194 



At the inception of the contract. Note well that the above equations are true, 
under adequate rate schedules, at the moment the insurance contract is made, but 
may not hold true in any subsequent year. After the first contribution payment, the 
present value of future contributions is less than the present value of the promised 
benefit , and reserve accumulation is required to make good the difference, as later 
will be explained. 

In Exhibits I and 2 the arithmetical process to obtain A and a is clearly and in 
great detail set forth, both on the whole life and on the- temporary or term basis, 
and in respect of death benefit only and of combined death and endowment benefits 

In all of the cases mentioned the foregoing three equations hold true. 

And further : 

A=The Benefit Side, 
PXa=The Payment Side 

of the Level Premium Insurance Contract, and at the inception of this contract, the 
Benefit Side must equal the Payment Side, and this rule holds in all cases. 

Instead of the Benefit being for a uniform amount as assumed in Exhibit 1, sup- 
pose that the promise is to pay $700 in the first year, $800 in the second year, $900 
in the third year and $1,000 thereafter, thus having a varying in place of a uniform 
benefit. Then how would we determine its Present Value? 

The process is identical with that for finding A when the benefit is $1,000 from 
the beginning of the insurance. Thus : 



Beginning of 
Years. 


Number Living Begin- 
ning of Years. 


Amount of 
Certificate. 


Total 
Protection. 


1 

2 
3 
4 


92,215 
91,648 
90,070 
90,479 


$ 700 

800 

900 

1000 


$64,550,500 
73,318,400 
81,063,000 
90,479,000 



After the completion of the third year the protection is on the basis of $1,000 and 
the total for each year is 1,000 times the number living as found in the mortality 
table. So also the yearly instalments of claims after the third year is 1,000 times the 
number dying as given in the mortality table and also in Exhibit 1. 

The instalments of claims must be determined from multiplying the total protec- 
tion by the probability of dying. Thus : 



Beginning of 
Years. 


Total 
Protection. 


Probability 
of Dying. 


Instalment 
of Claims. 


1 
2 
3 
4 


$64,550,500 
73,318,400 
81,063,000 
90,479,000 


.0061487 
.0063067 
.0064895 
.0066977 


$397,000 
462,000 
526,000 
606,000 



Where the protection begins with $1,000 the total protection is $92,215,000, and 
the first year's instalment of claims is $567,000. When the protection begins at $700, 
the total is $64,550,500 and the first year's instalment of claims is $397,000, with 
similar reductions in the second and third years. 



195 



After the third year the instalments of claims obviously are the same as in Exhibit 
I, since the basis is $1,000 for each person. 

To find the Present Values of the Instalments, we adopt the identical procedure 
as for Exhibit i. Thus: 



Beginning of 
Years. 


Yearly Instalments 
of Claims. 


Present Value 
of $1.00. 


Present Value 
of Claims. 


1 
2 
3 
4 


$397,000 
462,000 
526,000 
606,000 


.961538 
.924556 

.888996 
.854804 


$381,630.00 
427,510.00 
467,650.00 
518,010.00 



The succeeding years to the end of the sixty-fourth year would be identical with 
Exhibit i. But the total of the claims would be $91,864,000, instead of $92,215,000, and 
the total of their Present Values is $27,490,473.44, instead of $27,818,663.44. 

However, the Number Living at the Beginning of Years would not be changed 
by the fact that each person received less than $1,000 of protection during the first 
three years of membership, and the amount of yearly instalments of contributions 
of $1.00 at beginning of years by each person living would not be changed, and 
hence Exhibit 2 would remain unchanged. 

Therefore, we would have the same total of Present Values of Contribution In- 
stalments, $1,674,337.74 as the divisor into $27,490,473.44 (the reduced total of Present 
Values of claims), giving $16.42 as the Level Annual Contribution Whole Life Rate 
at age 35, where $700 is paid at death in the first year, $800 in the second, $900 in 
the third, and $1,000 thereafter. 

The Level Annual Whole Life Rate is $16.62 when $1,000 is payable in all years. 
The scaling of $300 in the first year, $200 in the second, and $100 in the third reduces 
the annual rate by 20 cents. 

If the protection began at $700 in the first year and increased by a given amount 
each year to the end of "Life Expectancy," say by the uniform amount of $10, then 
we would multiply the "Number Living" at the beginning of the first year by $700; 
at beginning of second by $710; of the third year by $720, and so on for thirty years, 
until the amount equaled $1,000. The protection thus obtained would be multiplied 
by the "Probabilities of Dying" to get the Yearly Instalments of Claims, and the 
latter would be multiplied by the interest discount factors to secure the Present 
Values, the total af which would be divided (for age 35) by $1,674,337.74 to obtain 
the Level Annual Contribution Rate. 

The varying benefit only affects the construction of Exhibit 1. The annuities ob- 
tained from Exhibit 2 remain unchanged. When the benefit is less than the unit of 
$j,ooo, the resulting total of Present Values is less as a dividend, and, of course, the 
quotient is less as an annual rate. 

The reduction in the rate by giving less than $1,000 during "Life Expectancy" 
is much exaggerated, as an example would prove. 

If there were a decreasing instead of an increasing benefit, the process to find 
the yearly instalments of claims and their present values would be identical with 
that shown for increasing benefits. 

The annual contributions for Term, Limited Pay and Endowment varying benefits 
could be obtained by use of temporary single premiums as explained for Exhibits 
1 and 2. 



A-[vK2Xi |a)+v 2 (2X 2 |a)+v 3 (2X 3 |a)] = P / Xa. 

dividing through by a, we have 

p/ _A-[vK2Xila)+y2(2X 2 la)+v 3 (2X3la)] 



196 

; 

Varying Contributions. 

Suppose the rate of contribution is to increase or decrease for a number of years, 
then how can such a varying annual contribution rate be determined? 

The simplest demonstration of the process is to employ the equation 

Benefit Side=Payment Side, or 

A=Pya. 

But P is to vary from year to year, say, for three years. Then let P' be the initial 
contribution and that it be increased by 2 for three years and afterward remain level. 

P', being the initial rate, must be paid through the period of protection, and ob- 
viously its value is 

P'Xa. 

The first increase at the end of the first year is 2, which must be paid through 
the period of protection, beginning the second year. Obviously the present value of 
this first increrase is 2 multiplied by the present value of $1.00, paid annually, begin- 
ning the second year. 

Similarly the second increase in the rate by 2 is made at the end of the second 
year and its present value is 2 multiplied by the present value of the annuity of 1, 
beginning the third year. 

Likewise the present value of the third increase of 2 is the product of its mul- 
tiplication by the annuity, beginning the fourth year. 

Let 1 1 a, 2 1 a and 3 |a stand for the value of the annuities deferred one, two and three years. 
Then the equation becomes 

A = P'a+2Xi |a+2X 2 |a+2X 3 |a, 

with the last three terms discounted one, two and three years. 

Let v 1 represent the value of $1.00 discounted for one year, v 2 = discounted value for two 
years, and v 3 = discounted value for three years. Then the equation becomes, 



. 



For age 35 we found (from Exhibit 2) that a (the whole life annuity single premium) was 
$18.16. 

1 |a would be the single premium for the whole life annuity at age one year hence, or age 3(J, 
and it could be found by constructing a table for age 36 similar to Exhibit 2 for age 35. 

Also 2 I a and 3 la represent annuities beginning two and three years hence, or at ages 37 and 
38, and could be determined by a process similar to that illustrated by Exhibit 2. 

The single premiums for whole life annuities at ages 36, 37 and 38 are $17.95, $17.94 and 
$17.53, respectively. 

The values of $1.00 due one, two and three years hence (discounted at 4 per cent) are .961538, 
.924556 and .888996, respectively. 

We have already found that A 35 (the single premium for the purchase of $1,000 promised 
death benefit) was $301.68. 

Substituting, the equation becomes, 

w 301.68-.9615(35.90)+.9246(35.48) + .8890(35.06) 301.68-98.50 M _ ft .. . . . . 

P ' = ^-— -= — — = $11.19 equal the initial 

18. lo 18. lo 

contribution at age 35, and when increased by $2.00 for three years would give the level annual 
rate after three years ($11.19 plus $6.00), or $17.19. And this instead of $16.62 as the level 
annual rate from the beginning. 



197 

The employment of temporary single premiums for annuities, as explained in con- 
nection with Exhibits i and 2, will enable the computer to obtain increasing or de- 
creasing contribution rates for term, limited payment and endowment contracts. 

The foregoing tedious details are excusable only for the reason that they are 
made for those who want arithmetical examples of the method of computing con- 
tribution rates. 

They are presented with the hope that the simplicity of the illustrations will dispel 
the common fallacy concerning "Life Expectancy" as a factor entering into the com- 
putation of level annual contribution rates. 

SHORT CUTS OF CALCULATIONS. 

To follow the method of computation illustrated in the Exhibits and explained for 
varying benefits and contributions would require the extended columns for each age 
of entry as shown for age 35. 

Short cuts in the way of "Commutation Columns" have been devised, and the 
understanding of them appears to be a serious difficulty with those who are not 
expert mathematicians. 

I will try to make a simple explanation of their construction and use. 

Refer to Exhibit 1 and note that the first thing is the determination of the "yearly 
instalments of claims" expected to mature during the period of protection. The 
actual process is better illustrated by Exhibit 3, when the yearly instalments are not 
the tabular number dying as given in the mortality table. 

The second process is to obtain the present value of the yearly instalments 01 
claims, which is accomplished by multiplying the amount for each year by the present 
value of .$1.00 discounted for one, two and so forth years. 

In the illustrations the value of $1.00 due one year hence is the multiplier for the 
first year's instalment of claims. 

Instead of using this as the first discount factor to form the first "commutation column/' 
designated C x , we take the value of $1.00 due one year after the year represented by the age for 
which the computation is to be made. We do this because, for convenience, it is assumed that 
Cx = d x v x+ 1 . In other words the value for C for any age as x is equal to the product of the num- 
ber dying at that age by the present value of SI. 00 due in a period of time one year greater than 
age x. 

That is to say, from Exhibit 1 for age 35 we would take the value .243669, oppo- 
site the year 36, instead of .9615*38, opposite the year 1. 

Beginning with the youngest age given in the mortality table (age 20 for the. 
N. F. C.) we would take the value of $1.00 due the year hence represented by the 
age one year older than the youngest (or in 21 years) as the multiplier to represent 
the claims maturing in the first year of age, and thereafter successively use the corre- 
sponding present values of $1.00 and yearly instalments of claims to the end of the 
mortality table. 

Turn to Table II of the Appendix. 

In the first column, headed x, are the ages. 

In the second column, headed v x , are the present values of $1.00, the first being the 
value 20 years hence, .456387, and is the same as used in the exhibits for the twen- 
tieth year. 

In the sixth column, headed C x , are the amounts corresponding to the present 
values of the yearly instalments of claims on the basis of 1.00 instead of 1,000. 

That is to say, the first value of C20 (219.416801) is the product of 500 (the num- 
ber dying at age 20) by 1.00 (the unit of benefit) by .438834 (the present value of 
1. 00 twenty-one years heiice). 



198 

This value of C20 corresponds to the present value of the instalments of claims 
in Exhibit 1, except, as stated, the promised benefits are on the basis of $1.00 for 
each death instead of $1,000. 

In Table 1 of the Appendix, the third column, headed d x (number dying), giv°s 
the number of tabular deaths during each year of age, and these multiplied by $1.00 
will give the yearly instalments of claims on the assumption of paying $1.00 at 
each death. 

Multiplying each of these yearly instalments of claims by the value of $1.00 for 
the year one age advanced, the amounts corresponding to the present values of the 
claims are obtained as given in column Cx of Table 2, which are of identical char- 
acter to those obtained for ages 35 to 98 of Exhibit 1, excepting as to the unit of 
protection as heretofore explained. 

If we take the total of the values in the C x column of Table 2 from any given 
age, this total can be used to obtain the single payment to provide for the promised 
benefits at that age, in a similar manner to that of finding the single premium for the 
protection, at. age 35 in Exhibit 1. 

However, by summing the Cx column of Table 2 from the oldest to the youngest 
age, and recording the subtotals for intervening ages, at once the total for any given 
age is obtainable. Thus : 

The oldest age is 98 and the present value of the claims expected to mature in 
the last year of age is .061776. Starting with that value, the process would be (omit- 
ting the sixth decimal) : 

Value at 98 of C 06178 = M 98 

Value at 97 of C . .14991 



Total at 97 of C 21169 = M 97 

Value at 96 of C 42317 



Total at 96 of C 63486 = M 95 

Value at 95 1 .01918 



Total at 95 of C 1 . 65404 = M 9 . 






and similarly to the youngest age 20. The sum of the values of C x are recorded in 
the seventh column of Table 2 under the title of M X =2C X (2 is the Greek letter 
sigma, and stands for "summation"). 

The number 9669.13897, opposite age 20, is the total of the numbers in column 
C x from 20 to 98, inclusive. 

The number 7049.68360, opposite age 35, is the total of the numbers for ages 35 
to 98 in column C x . And similarly for other numbers in column M x , they are the 
respective totals for the opposite ages to the end of the Mortality Table, and corre- 
spond to the total for age 35 to 98 in Exhibit I. 

Now assuming that each person living, given in column 2 of Table 1, paid $1.00 
at the beginning of the year (precisely as done in the illustration by Exhibit 2, but 
commencing at age 20 instead of 35), we form a column of yearly instalments of con- 
tributions, as in Exhibit 2. 

The first payment at age 20 by the 100,000 living would give immediately $100,000. 

In Exhibit 2 the 92,215 persons living at age 35 paid $92,215 immediately, and it 
was entered at its face value of $92,215 in the column of present values of yearly 
instalments of yearly contributions, because it was in hand' at the beginning of the 
insurance. 

But the treatment is now changed by the employment of the present values of $1.00 
for years corresponding to years of age. 



199 

Therefore, instead of multiplying $100,000 by 1.00, we multiply by the value of 
1. 00 twenty years hence, or .456387, as given in the column v x of Table 2, oppo- 
site the year 20 in Exhibit 1. 

The product, to six decimal places, is given in column D x of Table 2, being 
45638.694620= D20. 

The column Dx of Table 2 corresponds to the column of Present Values of 
Yearly Instalments of Contributions of Exhibit 2. The only difference being in the 
fact that the yearly instalments of contributions are multiplied by the present value 
of $1.00 for the year equal to the insurance age instead of the year of insurance 
duration. 

At this point it is well to observe that in the Tables of Values a unit of 1 is 
taken for the amount of contribution, and hence denominations of dollars and frac- 
tions thereof are omitted or understood. 

For this reason the number living (designated by l x ) are taken as the multipliers 
instead of the amounts of $1.00 by the number living. Thus at age 20 the number 
living is 100,000, and multiplied by the present value of 1 in the twentieth year would 
be, as stated, 45638.69462. 

The present value of 1 is designated by v; and where the value is taken as of 
the insurance age (x) then it is designated v x . 

The number living is designated by the letter 1, and for the number at any insur- 
ance age a suffix is added for the given age, as I20 for the number living at age 20; 
and, therefore, lx is used for a general designation of the column of the number living. 

When the number living is multiplied by the present value of 1, the general ex- 
pression for the product is l x v x which is further designated by D x for convenience 
and brevity. 

Similarly, the number dying is designated by the letter d. For a given age, as duo. 
And generally, d x . 

Omitting monetary considerations and making the insurance unit I, then we 
obtain the present value of the yearly instalments of claims by using the tabular 
number dying. 

As before stated, we take the present value of 1 for the year one year advanced 
in age as the multiplier. Therefore, for age 20 we have 500 multiplied by .438833602, 
giving 219.416801, being d2o v 21 =C2o. And generally, d x v x+lz =C x . 

Returning to the discussion of the column D x of Table 2, which corresponds to the 
present value of yearly instalments of contributions, the total of the column for any 
age can be used to obtain the single premium for an annuity, similar to the use of 
the column of present values of contributions in Exhibit 2. 

In a manner similar to that heretofore shown for summing the Cx column, we 
may sum the D x column of Table 2 from the oldest to the youngest age and, recording 
the subtotals for intervening ages, at once obtain the total for any given age. Thus : 

Value at 98 of D 06425 = N 98 

Value at 97 of D : 22272 

Total at 97 of D 28697 = N 97 

Value at 96 of D 67173 

Total at 96 of D 95870 = X 96 

Value at 95 of D 1 .75856 

Total at 95 of D 2.71726 = N 95 

and similarly to the youngest age 20. The sum of the values of D x are recorded 
in the fourth column of Table 2 under the title of N X =2D X . 



200 

The totals in the N x column represent the 

Payment Side 

of the insurance contract, because they are derived from expected yearly instalments 
of contributions. 

The totals in the M x column represent the 

Benefit Side 

of the insurance contract, because they are derived from the expected yearly instal- 
ments of claims for benefit. 

To obtain the level annual contribution rate for any age it is only necessary to 
divide the number in the M x column by the number in the Nx column opposite the 
given age. Thus : 

Benefit Side Payment Side Annual Rate 

7049.68360 -r 424294.62475 = .01662 
M 35 N 35 P35 



have 



If the result is desired on the basis of $1,000, multiply by 1,000, and we have 
1,000 P35 — $16.62 = Annual Rate, which is identical with the result obtained from Ex- 
hibits 1 and 2 for the whole life level annual contribution to provide a death benefit 
of $1,000. 

The same principle obtains in the use of the M x and the N x columns to secure the 
level annual contribution for term or limited Payment or Endowment Insurance 
contracts. Thus : 

Benefit Side Payment Side 

(M x -M x+20 ) - (N x -N x+20 ) 

gives the level annual contribution rate for an insurance of 1 for a term of twenty 
years. In figures taken for age 35 from the M x and N x columns of Table 2, we have 

Benefit Side Payment Side 

(7049 . 68360 - 4477 . 07072) ^- (424294 . 62475 - 1 13737 .21570) 

M 35 M 55 N 35 N 55 

The annual contribution for a term to age 70 would be 

Benefit Side Payment Side 

(7049 . 68360-2232 . 70894) + (424294 . 62475 - 24269 . 33480) 

M 35 M 70 N 35 • N 70 

The level annual contribution rate for a 20-year limited payment insurance of 1 
would be, for age 35, 

Benefit Side Payment Side 

7049 . 68360 -h (424294 . 62475 - 1 13737 .21570) 

M 35 N 35 N 55 

As previously explained an Endowment Insurance is a combination of a Term 
Insurance and a Pure Endowment. 

A Pure Endowment contract is one that promises to pay a sum at the end of a 
given number of years, or on attaining a given age to the survivors of those living 
at the date of the contract. Nothing is paid to those who die during the term of 
the contract. 

The Pure Endowment is the antithesis of the Term Insurance. The latter pro- 
vides benefits to the dependants of those who die during the term. The Pure Endow- 
ment provides benefits for those who survive the stated period. 



20 1 

The combination of the two makes provision for the beneficiaries of those who die 
and for the survivors themselves, and hence is called Endowment Insurance. 

The level annual contribution for 20-year Term Insurance for age 35, as here- 
tofore shown, is 

Benefit Payment 
Side Side 

(M 3 5-M55)-HN35-N 5 5) 

The Pure Endowment is paid to Survivors, and in this case the Benefit Side 
is represented by the Number Living at the end of the Endowment Period. 

It has been said that D x is derived from the number living. The latter (lx) 
being discounted by the present value of $1.00 to obtain the D column. 

The endowment being payable to the number living at the end of 20 years from 
age 35, obviously this number would be that given in Table 1 for age 55, being 76,534, 
or Ik. 

The discounted value of 76,534 (1-,) is that number multiplied by the value of 1 
for the year 55, or .115656 (represented by v 85 ). And we have 

I55 v 55 D55 

76,534 X . 115656 = 8851 .579 = Endowment Benefit. 

The payment side would be the same for the Endowment as for the Term Insur- 
ance, because the same persons make contributions during the 20 years, and there- 
fore the annual rate for the Pure Endowment is 

Benefit Payment 
Side Side 

D55 +(N 3 5-N 55 ) 
Combining the two formulas we have, 

Benefit Payment 

Side Side 

(M 3 5-M55)+D55-HN35-N 5 5) 

which gives the level annual contribution at age 35 for a 20-year Endowment Insur- 
ance. 

Anyone can make the substitution of actual numbers for the symbols by entering 
the M, D and N columns opposite ages 35 and 55, and the answer then is a simple 
matter of subtraction, addition and division. 

The above formula is made general by expressing it in the terms of any age (x). 

Benefit Payment 

Side Side 

(M x -M x+20 )+D x+20 ^ (N x -N x+20 ) 

In Exhibits 1 and 2 it was necessary to get the total of present values of claims 
and contributions to obtain the single premiums for insurance and annuities for a 
term of years. 

On the margin are given these totals for 5, 10, 20 and 35 years in order to illus- 
trate the method of employing single premiums for insurance and annuities in obtain- 
ing annual premiums. 

By summing from the oldest to the youngest age, and recording the subtotals, as 
explained for the M and X columns of Table 2, the total of the C or D column 
for a term of years can be got by taking the differences of the M and N columns. 



202 

Thus, the sum of the numbers in the C column from age 20 to 24 inclusive equals 
M 20 — M 2 5. And the sum of the numbers in the D column for 20 years from age 35 is 
equal to N 35 — N 55 . 

This is an illustration of the short cuts possible by use of the "Commutation Col- 
umns," and, at the same time, an explanation of the preceding formulas where the dif- 
ference of the M's and N's appear. , , 

The level annual contribution for a varying benefit (increasing or decreasing) 
is also readily obtained by use of the "Commutation Columns." 

If the benefit begins with/ $700, obviously that amount is promised through the 
period of protection, and hence is represented by 700 times M 35 . Being increased 
$100 at the end of the first year that amount runs through the period of protection 
from age 36 and is represented by 100 times M 36 . Being again increased by $100 at the 
end of the second year that amount runs through the period of the protection from age 
37 and is represented by 100 times M S z. Being increased by $100 at the end of the 
third year that amount runs through the period of the protection from age 38 and is 
represented by 100 times M 38 . The benefit is $1,000 after the third year, and we have 

700M 35 +100M 36 +100M 37 +100M 3 8=The Benefit Side, 

And this corresponds with the illustration, made by use of Exhibit 1, modified 
by multiplying the number living by 700, 800, 900 and 1,000 to find the amount of 
yearly claims, and then getting their present values. Obviously the same final 
results would have been obtained had the number living first been multiplied by the 
present value of 1, and then multiplied by 700, 800, 900 and 1,000, as in the case of the 
multiplication of the numbers in the M column, which latter represent the totals of 
present values of claims on the basis of an insurance of 1. And it will be remem- 
bered that the numbers in the C column represent the present values of yearly claims, 
and that M is the summation of C. And that the C column of Table 2 corresponds 
to the column of present values of claims of Exhibit 1. 

Varying rates of contribution also readily are obtained by use of the Commutation 
Columns. 

Assume that the protection is 1,000 for whole life and that the benefit is uniform, 
and taken at age 35, and that the initial contribution rate is P' and is increased by 
2 for three years and then continues uniform for the remainder of life — being the 
same assumptions as for the varying rate in the preceding explanation for its computa- 
tion, by reference to Exhibits 1 and 2. 

The Benefit Side = 1000M 35 . 

The Payment Side = P'N 3 5+2N 3 6+2N37+2N38. 

Remember that, at the inception of the insurance contract, the Payment Side must 
equal the Benefit Side, then by equating we have 

1000M 3 5 = P , N35+2N36+2N37+2N38. 

By reference to the M and N columns of Table 2 (in the Appendix) the value* 
of 1,000 M.!.-,, N», 2N.-.C, 2Nw and 2N M could be found, and P', unknown quantity, can 
be determined from the equation by transposing, so that 

P'N 35 = 1000M 35 - (2N 36 +2N 37 +2N 38 ) 

, = 1000M 35 -2(N 3 6+N 3 7+N 38 ) = 7049083.00-2(400925.92+378594.17+357256.75) 
N 35 424294.02 

= 7049G83.G0- 1130770.84 
424294.02 



2 3 

In the preceding illustration where the single premiums for annuities (2Xi |a, 2X2 |a and 
2X.5 |a) were employed the value of P' was found to be 11.19. With the use of the same number 
of decimals the two results would not differ even to the amount of 1 in the second place of deci- 
mals. The difference of .06 is due to a more accurate calculation in use of the Commutation 
Columns. 

Increasing P' (11.25) by 2+2+2 we have 17.25 as the level annual rate after the 
third year to provide for $1,000 whole life death benefit. 

When the Commutation Columns are used the formulas at first may appear for- 
midable, but a little study and commonsense reasoning will render them easy of 
comprehension. 

If one will give a few hours study to Exhibits 1, 2, 3, 4, 5 and 6, which are 
worked out by arithmetical processes, he will become so well grounded in the funda- 
mentals that little trouble will be experienced in comprehending the construction of 
the "Commutation Columns/' especially when only death rate and interest rate are in- 
volved. When the sickness rate and the permanent total disability rate are included 
and combined with the death and interest factors, then there are such complications 
that no one other than an experienced and capable actuary should essay to deal 
with them. 

It would be beyond the scope of this work to undertake any explanation of the 
computations where more than mortality and interest are involved, although tables 
appear in the appendix which give values derived from combined death and perma- 
nent total disability tables. 

In presenting the formulas for varying benefits and contributions, the M and N 
columns were employed thus for the varying benefit, 

Benefit Side= 700M X + 100M X+1 + 100M x+2 + 1 00M X +3 

And for the varying contribution, we had 

Payment Side = P^N x +2N x+1 +2N x+2 +2N x+3 . 

Obviously if the increase (or decrease) covered many years the formula would 
become very cumbersome. To avoid the repeated additions, there is a summation 
from the oldest to the youngest age of the M and N columns, similar to the treatment 
of the C and D columns, heretofore explained. 

The subtotals in the summation of the N column are gjven in Table 2 in the columns 
designated S X = 2N X . 

The subtotals in the summation of the M column are given in the column headed R X = 2M X 

By using the R, the above formula becomes, 

Benefit Side = 700M x +100(R x+ i-Rx + 4). 
And in the example for varying contribution, the formula would become by use of the S 

Payment Side = P x N x +2(S x+1 -S x _ H ). 

Here advantage is taken of the Summation of M and N to obtain their totals by 
taking the differences of the R and S. 

It is my conviction that every officer of a life insurance organization should be 
able to compute the contribution rates for the ordinary forms of insurance con- 
tracts, and I guarantee that anyone can do so after two days of assiduous study, where 
the explanations are made as in this publication, free from the ordinary expressions 
of the expert. 



204 

I do not mean to be understood as saying that officials, whose duties are admin- 
istrative and executive, should undertake the work of the actuary. Such a position 
would be as untenable as to say that they should do the work of the bookkeeper be- 
cause they know the theory of accounting and could make single or double entries 
and audit the books to prove their accuracy. 

Every man who understands the system of bookkeeping is not a bookkeeper; nor 
every man who understands discounts, a banker or 'money lender. Neither every offi- 
cial, who understands the principles of life insurance and how to compute contribu- 
tion rates, need become an actuary. 

I go further and assert that life insurance is of such importance that every young 
man and woman should understand it before they leave the public schools. 

If for no other reason, the science of life insurance should be taught in the 
schools, because of the mathematical training in the important and everyday processes 
of addition, subtraction, multiplication and division. 

Absolutely -these four arithmetical processes are all the requisites for the calcu- 
lations for the ordinary forms of life insurance contracts, and only an elementary 
knowledge of equations is necessary to evolve the formulas for use of the commuta- 
tion columns. And the construction of the -latter is simple, as any reader of the 
foregoing explanations will testify. 

In the effort to make plain the principles and practices of life insurance I may 
be violating the ethics of the profession, judging from the following criticism of a 
well known actuary: "I don't believe in so far simplifying technical subjects as to 
dissipate entirely the professional nimbus or aura to which the standing of the expert' 
in the community is largely due. It is not my intention to uphold quackery in the 
slightest degree, but merely to protect the public from the danger of acquiring the 
erroneous opinion that the knowledge of the expert is but little superior to that of the 
man in the street." 

Our second lesson will be finished with the following recapitulation, which I com- 
mend to be committed to memory, and having them in mind, let there be a rereading, 
beginning with the explanation of the exhibits. 

x = A person of attained age x. 

v x = Present Value of $1.00 for the year of age x. 

l x = Number living at age x. 

d x = Number dying at age x. 

l x v x = D x . 

d x v x+1 = Cx. 

M x = SC X = Present Value of an insurance of 1 at age x 

= Cx+C x +i+C x+ 2+, etc. 
R X = 2M X 

= Cx-r-2C x+ i-r-3Cx + 2+, etc. = 2 2 C x . 
N x = 2 D x = Present Value of an annuity of 1 at age x 

= Dx+Dx+i+D x +2+,etc. 
Sx = 2N x 

= Dx+2D x+ i+3Dx + 2+,etc., =2 2 D X . 






The symbol 2 2 denotes the "second summation, " or the "sum of the sum of the function 
under it." 

The C, M and R columns are known as the "Insurance columns," because they 
are derived from the d column, which latter represents the number dying; and the 
dying mature the claims for promised benefits or protection. 

The D, N and R columns are known as the "Annuity or Payment Columns," be- 
cause they are derived from the 1 column, which latter represents the number living, 
and the living make the contributions or payments to provide for the benefit claims. 



2 05 

There is close relation between the number living and the number dying, be- 
cause the latter are merely withdrawals from the former. 

Tims: At age 20 there are 100,000 living. At age 21 there are 99,500 living. 
Assuming that death only is the cause of the decreased number at 21, 

then 100^000-99,500 must equal the number dying, or 5 qq. 



Then, instead of writing 
wc could write 



d 2 o v 21 c 2 o 

500X .438834 = 219.416801 



1'20 _ 121 w V 21 _ C20 

(100000 99500) A .438834 "219. 416801 

Performing the multiplication, we have 

v 21 l 2 o — v 21 l 2 i = C 2 o. 

Now, v 21 = vXv 20 , it being known by any one informed concerning the succeeding present 

values of 1.00, that 

lXv = v 1 (or simply v), 

v 1 Xv = v 2 , 

v 2 Xv = v 3 , and so on until 

v 2 QXv = v 21 , so that 
v 2i = v 2o XV) an( j 

v 21 Xl::o = vXv 20 Xl 2 o, but 

v 20 Xl 2 o = D 2 o, and 

v 21 Xl 2 i = D 2 i, then substituting, we have 

vD 2 o — D 2 i = C 20 , or, in terms of x, 

vD x — D x+ i = C x , and since N x is the summation of D x , and M x is 
the summation of C x , the identical relations continue, and we have vN x — N x+ i = M x , and since 
S x is the summation of N x , and R x is the summation of M x , the identical relation is true of the 
second summation of D and C, hence we have vS x — S x+ i = R x , whence it would be possible to 
dispense with the "Insurance Columns, " C, M and R and obtain single and annual premiums to 
provide for promised death benefits by the employment of the "Annuity or Payment Columns," 
D, N and S. 

To avoid confusion it should be explained that English writers and actuaries and one Amer- 
ican writer whose "Insurance Primer" has been used as a text book in some schools and colleges, 
in giving the summation D x , record the first subtotal in the N x column opposite the second 
age from the oldest age, instead of entering it opposite the oldest age. For example, taking 
Table II, 

D 98 =. 06425 = N 98 
D 97 =- 22272 



2=.28697 = N 97 

The British column for N would have no value for the oldest age, 98; but 

N 97 =. 06425 

N 96 =. 28697. Therefore 
N x = D x+ i+D x + 2 +, etc., instead of 

N x = D x +Dx + i+Dx + 2+, etc., as used by the American 
writers generally and followed in this publication. The Acturial Society recommend that it be 
written BJ X so that FJ x = N x _i and § x = S x _i but the closed N and S have been used in this 
book. 

Let it be noted that the 

American N 98 equals the British N 97 , 
American N 97 equals the British X 06 , 
American N 96 equals the British N 95 , 
American N x equals the British N x _i 



206 

which latter is the general expression. The equations to show the connection between the 
benefit and contribution columns, under the British notation would be as follows: 

C x = vD x — D x +i, 

M x = vN x _ 1 -N x , 

xi x — VO x _i — S x . 

There would, of course, be no change from the American System in the first equation, as only 
the recording of the totals in the summation of the D column varies from the American method. 

PRACTICAL APPLICATION OF FORMULAS. 

At the outset I want to admonish against an erroneous idea prevailing very gen- 
erally, that different principles are involved in the computation of premiums for 
"old line'' life insurance companies from those required to obtain the contribution 
rates for fraternal beneficiary societies. 

For the same benefits promised and under the same conditions of contribution, 
the net rates would be the same for the life company as for the fraternal society, 
and the same methods of computation would be followed. 

I have explained, in commenting on the open assessment companies and the "Flex- 
ible Premium System," why the fraternal societies are justified in adopting contribu- 
tion rates that will yield no anticipated surplus above the estimated accumulation to 
maintain rates level and uniform, or to provide for endowments or annuities at old 
age. 

The "old line" company contract is "fixed" as to benefit promised and premium 
required — it is a "fixed" contract. 

The Fraternal Beneficiary Society contract is "flexible" in every respect of the 
benefit promised, or the contribution required, or both. Either the benefit is limited 
to the amount of one assessment not to exceed a stated amount, or the contribu- 
tions are subject to change, or both benefit and contribution may be altered. 

The nature of the life insurance company contract makes a surplus over reserve 
accumulation a necessity or demands annual redundant premiums. Unless there is 
special provision in the way of capital subscription for the surplus, its accumulation 
must be by redundant premium payments. 

To obtain reundant premiums either there must be a low interest or a high 
mortality assumption,, or both. That is to say, the interest assumed to be earned 
must be lower than actually earned, or the assumed mortality must be higher than 
the actual, or both the assumed interest must be lower and the assumed mortality 
must be higher in the computation of premiums than expected in actual operation. 

The fraternal beneficiary society, having the reserved right to pay less than 
stipulated in the contract or to charge more than the initial rate of contribution, may 
omit any provision for a surplus over the reserve' requirement, and may have com- 
putations of interest and mortality assumptions on the basis of what reasonably may 
be expected in future actual operation. 

The "Safety Clause" (the right of extra assessment) in the society contract may 
well be considered as taking the place of the "Buffer Fund" of the life company. 

For a more extended exposition of this subject, see discussion of the "Flexible 
Premium System." 

Let it be impressed that the mathematical processes and the formulas and the 
computations under them are not different when made for a life company than for a 
fraternal beneficiary society. 

All that has been or may be written on the methods for computing contribution 
rates is of general application. 



207 

Any mortality tabic may be substituted for that of the National Fraternal Congress 
Table which has been used in the illustrations. 

Any formula may be applied to the values derived from any mortality table or to 
the first combined death and disability tabic — having in mind that all formulas in this 
book follow the American notation and must be modified to conform to the British 
or ether different notations. 

Any one can convert the following formulas by remembering that (x) or (x-fn), 
or (x — n) represent the age of the person for whom the value is to be obtained, and 
then enter the commutation columns accordingly for the numerical quantities. When 
the latter are substituted for the symbols only the arithmetical processes of addition, 
subtraction, multiplication and division are required for the solution of the problem. 

To the curious it may be stated that in the original selecton of symbols, the letters 
were the first of significant words. Now they are used for convenience without par- 
ticular reference to the initial letter of any word. 

Long before benefits were payable at death, provision for the living was made, 
and the Government of England granted pensions or annuities on the payment of 
stipulated sums prior to the existence of life insurance organizations as we now 
have them. 

The first commutation columns were devised to facilitate the computation of annui- 
ties, and, for this purpose, only the D and N columns were required. 

The single premium for a whole life annuity is represented by a x , and 

a x =N x divided by Di; hence N was taken as the symbol because the first letter 
in the word "numerator." And D selected because the first letter in the word "denom- 
inator." And when N was summed resulting totals were designated S, because first 
letter in the word "sum." 

When the commutation columns were extended to life insurance computations the 
letter C was selected for no better reason than it was next to D in the alphabet, unless 
for the reason that it corresponded to the present value of claims, and was taken 
because the first letter in that word. M and R were accepted because of their alpha- 
betical proximity to N and S. The annuity is represented by a or a because the first 
letter in "annuity." 

However, the system of notation now recognized and employed by actuaries is 
arbitrary and must be learned from the books. An individual is at liberty to select 
his own symbols to give expression to his values. This was my case when I prepared 
values for permanent total disability benefits. I have given two tables for combined 
death and disability benefits. Both are from a combination of the mortality assump- 
tion, according to the National Fraternal Congress Table of Mortality, and disability 
assumption, according to the Fraternal Society Permanent Total Disability Experience. 
The first are the Tables originally prepared by me in 1902, before any other Actuary 
in this country had taken up a study of the question. The second are columns worked 
out by the formulas recognized by the Actuarial Society of America and the notation 
is the system promulgated by that Society. 

If anyone will perform the arithmetical calculations involved to obtain results in 
dollars and cents from the following formulas, he will be in position to assert that he 
can compute contribution rates for numerous forms of insurance contracts, without 
provision for expenses. 

Single Premium for Ordinary Whole Life Contract for Death Benefit only. 

A X = M X -D X . 



208 

For the Annual Net Contribution, 
P X = M X -N X . 

For the Monthly Net Contribution, 
P* 2 = M* 2 -M2N* 2 

For the Single Premium for a Whole Life Annuity payable annually, with the first 
payment at once, 

a x = N x ~D x . 

For the same with the annuity payable monthly, 

Single premium for a Deferred Whole Life Annuity payable annually, 
n|a x = N x+n ^D x . 



and payable monthly, 



M a x ^ x+n 



For an annual contribution to provide for the Annuity to begin at age (x+n), Pre- 
mium and Annuity payable monthly, 

For the Single Premium for a Temporary Annuity, 
or a*ri = N x - N x +n -*- D x . 



For the same with the Annuity payable monthly, 
[^ 2 oraJL = (N--N- + >D- 



The Single Premium for Temporary Insurance, 
n A x or A*-,= (M x -M x+n ) -^D x . 

The annual premium. 

| n P x or P^-,= (M x -M x+n ) - (N x -N x+n ) . 

Payable monthly. 

| n P-or P^=(M»-M» + J + (Ni 2 -Ni 2 +n ). 

Single Premium Term to Age 70, 

| 7 o_ x A x = (M x -M 70 )-KN x -N 7 o). 

Monthly premium for same. 

|,o-xP I ,f=(M I x 2 -M^)^12(Nf-N^). 

By substituting for "70" any other age, as 50, 55, 60, 65, etc., the formula will give 
rate for Term to Age 50, 55, 60 or 65, etc. 

I will not burden the pages further with formulas for monthly contribution rates. 
If monthly rates are desired make changes in formulas as indicated above, and enter 
the commutation columns computed on the monthly basis. If these are not given, 
the monthly rate can be obtained approximately from the formula 

P* 2 = 24P x -t- (24— ll(P x +d)), where d is equal to 1— v at the rate of interest assumed in 
the calculation of P x . 



209 

W^en the rate is 4 per cent, a close approximation for the monthly contribution 
for the whole life insurance for ages younger than 42 is to multiply the annual rate by 
.0875. After age 40 or 42 the resulting rate from using this factor will be somewhat 
too small, the deficiency increasing for the advanced ages. By gradually increasing the 
multiplier, the approximate accuracy can be maintained. 

However, it is much better to construct commutation columns on the monthly 
basis for the reason that approximation formulas are not readily adapted to monthly 
contributions for Term, Limited Payment and Endowment Contracts. The work of 
conversion is not great when using the following formulas : 



12 12 



ri 2 ^ ^-12 



Dx =k(d x +d x+1 ). Nx = sDx . s;=2n;. cj'-u+WC m;=k;. 

The commutation columns on the monthly basis for the National Fraternal Con- 
gress Table of Mortality and 4 per cent interest, given in this book, and originally 
computed for another book, were derived by very complicated formulas, in which I 
take no pride. 

However, the long and tedious process taught a valuable lesson, namely, that math- 
ematical and algebraic refinements entail useless waste of time when dealing with 
vital statistics and the contingencies of living and dying. 

Since 1900 I have investigated the mortality experience of about 100 different fra- 
ternal beneficiary societies, and have made annual investigations of a score of old 
and targe societies, to find varying ratios for each Society, and for each investigation 
of the same Society. 

A reference to the diagrams which graphically show the irregularities of death 
rates from age to age will convince anyone that we deal with an eccentric value when 
treating average mortality ratios. 

In the early days of my studies I accepted the often repeated statement that 
the death ratios amongst a large number of persons were regular, and in the unvary- 
ing character of their operation were like unto the law of gravitation. 

I am inclined to believe that the man who was responsible for that assertion had 
no experience in dealing with actual facts, but that he had all of his information 
from books which discuss pretty theories. 

I have no purpose to belittle the advantage of mortality tables and derived values. 
They can be handled as efficient tools for the building of great and successful life 
insurance companies and societies. But the truth of the case justifies the dissipation 
of the prevalent idea that the mortality table is in correspondence with actual death 
rate. 

The mortality table is a fiction, corresponding exactly with no actual experience, not 
even with that upon which it is based. Observe "graded" mortality ratios in compari- 
son with the irregular ones in actual experience as represented in the graphic illustra- 
tions heretofore given. 

The facts do not support the theory of refinements in mathematical calculations 
which have been presented in many publications. The main point is to be sure and 
get on the side of safety, since a few cents added to the rate will do no harm and 
may prevent readjustment. 

Twenty years of activity in the effort to help the fraternal societies out of trouble 
have taught many lessons, and one of the most valuable to. me is that a knowledge 
of the facts in a case is of more importance than anything else in deciding upon the 
best plan of business conduct. 



210 

Theory as a generalization of principles on which practice proceeds is most excel- 
lent as a mean toward a positive end. But the results of actual and practical opera- 
tion modify and should control theory. 

Theory and practice in their relation to each other may be likened to the science 
of composition as distinguished from the art of execution in music. 

Theories and refinements in mathematical computations are indispensable assets for 
an actuary, nevertheless, they are almost worthless if the possessor has not the expe- 
rience to make commonsense application of them in actual practice. 

With the( opportunity for observation covering thirty-five years of business con- 
tact I have found that intelligent men receive the best part of their education after 
leaving institutions of learning. It is original thought that counts, and it cannot be 
acquired from books, however useful (and they are extremely useful) books and 
schools are, as aids. 

This diversion was due to the reflection upon the computations of the N 12 and M 1 " 
columns in the year that the National Fraternal Congress formally ratified the mor- 
tality table which bears its name. I can give no better example to sustain my com- 
ment than an explanation of the method adopted in that instance. 

To get N x x 2 , D T X 2 was first obtained, thus : 

Assuming an even distribution of deaths occurring in a year, if there are lx persons 
living at the beginning of a year, and if d x die during the year, the deaths each 
month will be represented by d x divided by 12. 

The first instalment of the (annual premiums will be paid by lx persons; the sec- 
ond by l x — (d x -M2); the third by l x — (2d x -M2) ; . . . and the twelfth by 
l x — (ndx-^12). 

Furthermore, at the end of the year, the first instalment will amount to (l+i)X(lx-r-12), i 
being the rate of interest. The second instalment will amount to (l-f (lli-7-12))x(l x — (d x -r- 
12)) divided by 12. The third instalment will amount to (l+(10i-f-12)) X (l x -(2d x -r-12)) 
divided by 12; •• •• and the twelfth will amount to(l+(i-M2))x (l x -(lld x -f- 12)) divided by 
12. 

The sum of these amounts is 



1. ^ (12+ i2 + n+io+ i i) _^ (1+2+3+ +11 

+ ll+2.1+3.»+4.8+ +10.2+11 0)^(^2+^.) -^-(66+^ ) ) 

= Wl+^)-^(H+4i). 






To obtain the final term it was necessary to change 286i to 288i, but the consequent 
error is insignificant. 

To get D x x 2 the foregoing expression was multiplied by v x+1 , since it represents the 
value of the instalments at the end of the year. N I X 2 =SD I X 2 . 

The M x 2 column has nothing to do with the monthly payment of premiums, but 
it was constructed on the assumption that the death claims are to be paid within a 
month of approval — which is the general practice. 

If claims equal to d x -i-12 are to be paid at the end of the first month, the equivalent sum 
of money at the end of the year, will be (l-f- (Hi -i- 12)) X(d x -^l2). For the second month's 

claims the equivalent will be (l-f-(10i-r-12)) X(d x -r-12). and for the twelfth month 

it will be d x -7- 12. 



21 1 



d x / 1rtl 11 + 10+9+ + l /\ , A , lli\ 

lH 12+ 12 V = H 1+ ~247 



This expression multiplied by v x+1 will give C x 2 . M x 2 = 2C". 

The values obtained by the complicated formulas are substantially the same as se- 
cured from the approximation formulas first given. 
Annual Premium for Limited Payment, 

n P x = M x -(N x -N x+n ). 

Annual Premium for Endowment Insurance, 

Px^ = (M x -M x+n +D x+n )^(N x -N x+n ). 

Single Premium for Endowment Insurance, 

Ax^| = (M x -M x+n +D x+n ) -=-D x . 

Annual Premium for $1,000 of Insurance payable at death prior to age 70, or payable 
at age 70 in 10 equal annual instalments, first payment at age 70; contributions cease at 
70. If insured dies before instalments are paid the balance of $1,000 is paid in one 
sum to beneficiaries. 

lOOOPE^^Tl = 1000M x +100(N 70 -N8o) - 100(R ro -Rao) -r-N x -N 70 = 1000M x +100d(S 70 -£*<>) 

-N x -N 70 . 

If contributions are to continue during the payment of instalments or until death, 
the denominator would be 

N — Nso. 

Another formula is to treat the present value of the instalments at 70 as an 
endowment. 

lOOOPE^^I = 1000(M x -M 70 )+875D 7 o^N x -N /() . 

And 

lOOOAE^^I = 1000(M X -M 70 )+875D 70 ^D X . 

Annual Premium for $1,000 at death prior to 70, or an annuity for life of $100, first 
payment at 70. Contributions cease at 70. 

|7o-xPx = 1000(M x -M 70 )+100N 7 o^N x -N 70 . 

Single Premium for a death benefit of 1 in the first year and increasing by 1 until 
death 

(IA) X = R X -D X . 

The Annual Premium 

(IP)x=Rx^N x . 

Annual Premium for whole life insurance, all premiums paid to be returned in 
addition to the sum insuranced. 

P X = M X -(N X -R X ). 

Annual Premium for whole life insurance, all. premiums paid to be returned with 
simple interest at the rate i with the sum insured, 

Px = M x -=-(Nx-Rx-iSRx). 

Annual Premium for death benefit in the first year of $1,000 less the amount of 
the premium multiplied by the years of "Expectancy," and increasing for each subse- 
quent year by the amount of the premium to the end of "Expectancy," 

Px=1000M x -(N x+ e x M x -(R x+1 -R Xf i+e I )). 



212 

Annual Premium for a life annuity of i beginning at age 70, no benefit payable in 
event of prior death. 

Pnk = N 7 o-MN x -N 70 ). 

Annual Premium for an insurance of 1 at death, with an annual reduction in the 
contributions by the twentieth part of the first payment, so that the contributions dimin- 
ish each year and cease after twenty payments. 

n P x = M x -N x ~^(S x+1 -S x+21 ). 

My original purpose was to incorporate amongst the formulas one for each society, 
but to date only sixty-six have sent their laws and constitutions, and half of that 
number announce contemplated changes of material or minor importance, while up- 
wards "of one hundred give as the reason for not sending their laws that a new 
edition soon will be necessary on account of probable changes to meet conditions 
which are expected to develop under the operation of the valuation laws. In these 
circumstances the original purpose had to be abandoned. However, I have under- 
taken to give a sufficient number of formulas to enable the student to apply the com- 
mutation columns in any ordinary case. For the postage I will pass upon any special 
formula submitted by a subscriber to this book. 

A Novel Plan. Recently a very novel plan has come into prominence from the activity of 
its originator, The Heralds of Liberty, of Huntsville, Alabama, with executive offices in Phila- 
delphia. Because it is unique and very much out of the ordinary, the plan is being severely 
criticised by insurance agents and journals, and by some Insurance Commissioners. Some go 
so far as to characterize it as a gambling scheme, because the member holding the lowest num- 
bered certificate in his class may elect to surrender his certificate for cancellation in considera- 
tion of a cash payment, the election being granted at the death of a member of his class. In 
brief, $500 is made the unit of protection payable to beneficiaries at the death of the member, or 
a similar amount to the holder of the lowest numbered certificate on the death of a member who 
entered the Society at the same age and was in the same "Class" with the holder of such certifi- 
cate. Originally an Old Age Double Endowment was promised on attaining to a stated age 
above 70. 

No objection can be raised to the promise to pay the death benefit, nor to the former promise 
to pay an old age benefit. 

The payment to a living member at the death of an associate member is the cause of the ad- 
verse criticism. 

The members are placed in "Divisions" and "Classes." A "Division" is composed of not 
exceeding 1000 persons of all ages at entry within the admission ages. A "Class" is composed 
of the members of a "Division" who entered at the same age. Each member of a "Class" is 
given a number and at the death of one of the "Class," the Society will pay $500 to the bene- 
ficiary of the deceased member and $500 to the member of the same "Class" and "Division" 
who holds the lowest numbered certificate. 

It is charged that the payment to the living member is a "gamble," or "lottery." 

To the extent that life insurance is based upon the chances of living or dying, the life insur- 
ance business is a "gamble," or "lottery." To no greater extent is the payment of a sum of 
money to a surviving member on the death of an associate member. Survivorship insurance 
is too old and too well established and too favorably known to be characterized as a "gamble." 

It is argued that in ordinary survivorship insurance the parties as insured or beneficiaries 
are named in the contract, which is contained in one policy; but in this case each member holds 
a separate certificate and a payment is promised to Number 1 in the event of the death of Number 
2, or Number 10, or Number 20, or any other numbered person in his "Class." 



213 

The fact is ignored that the identification in advance of death is immaterial in the treatment 
of the probabilities involved. The death of some member of the "Class" is the event that fixes 
the time of payment, and it is wholly immaterial whether the amount be $1000 payable in one 
sum or in two sums of $500 each, if provision has been made for the total payment. 

In the text books we learn of joint life probabilities concerning persons designated u, v, x, y 
and z. Where is the difference in calling them 1, 2, 3, 4 and 5? 

It is perfectly orthodox to promise something to u in the event of the death of v, or of x, or 
of y, or of z. Why a "gamble" to promise something to 1 in the event of the death of 2, or of 3, 
or of 4, or of 5? 

"But the latter are not named in the same policy contract," is a reply. 

But if they are recorded upon the books of the Society, definitely associating them in mutual 
cooperation, and specifically setting them into a designated "Class," limited to a given number, 
and each furnished with a certificate reciting the conditions of insurance, and all are subject to 
the same probabilities and the Society to the same liabilities as if covered in a single policy con- 
tract, wherein is there any "gamble?" 

Every reputable and informed actuary will admit that contribution rates can be computed 
for the payment to the holder of the lowest numbered certificate (or for that matter to the holder 
of any numbered certificate in the "Class") upon the death of any member of the "Class." And 
the rates can be computed upon the basis of any ordinary mortality table for single lives, or with 
the aid of a table for joint lives. This fact takes the case from amongst those to be characterized 
as "lotteries," or "gambles," or "frauds." 

The formula for the benefits stated is one of the simplest in form, when employing Joint Life 
Commutation Columns. 

500Mxx-S-Nxx= Annual Premium, which provides $500 to the beneficiaries of the deceased and 
$500 to the surviving member of the same "Class" holding the lowest numbered certificate. (It 
could as easily be the highest numbered, or the next serial number to that of the deceased.) If 
the Single Life Columns are employed we have 

p x = 1000 (Mx-Mx+nJ-S-CNx-Nx+n), where 2l x+ n = l x . 

The two formulas are substantially equivalent. I give the rates for two equal lives in the 
appendix, derived from the "Makehamized" N.F. C. Table for Joint Lives. Using the same Table 
for Single Lives, rates by the last formula may be obtained for comparison. For the following 
ages the net annual premiums are as follows, on basis of, 



Lges. 


Joint Life. 


Single Life. 


20 


$ 8.15 


$ 8.09 


30 


10.65 


10.53 


40 


15.08 


14.76 


50 


23.28 


22.50 


60 


39.28 


38.15 



From an actuarial standpoint, the formulas for contribution rates to provide for the benefits 
of many societies would be very interesting, and I have been tempted to give the most unusual. 
However, for the reason that many changes are contemplated, and because no question has been 
raised concerning the benefits by Insurance Departments, I have not multiplied examples. The 
Heralds of Liberty, with their copyrighted plan, have brought about an especially interesting 
question which justifies the foregoing analysis. 

To avoid confusion from similarity I give the following expressions together : 

n P x = Annual Premium for Limited Payment. 
n | P x = Annual Premium for Deferred Insurance. 
| n Px = Annual Premium for Temporary Insurance, 

Or P — | = Annual Premium for Temporary Insurance. 

P — i = Annual Premium for Pure Endowment. 

xn | 

P — , = Annual Premium for Endowment Insurance. 

xn| 



214 

As heretofore stated, the notation for the first Death and Disability tables (see 
Appendix) was my own, because it was the first American production of its kind. I 
supplied other actuaries with the statistics and other tables have been constructed, and 
recently the Actuarial Society of America adopted a system of notation which follows. 
I have prepared a second series of Death and Disability values, which appear for the 
first time in this book. I also regraded the National Fraternal Congress Table of 
Mortality by the Makeham formula to facilitate the computation of contribution rates 
for joint lives. That table and derived values appear in the Appendix. 



DISABILITY SYMBOLS. 

l x a = the number of active lives at age x. 
l x =the number of invalid lives at age x, 

then lx a +lx = k* 






l x = the survivors at age x in a mortality table based on invalid lives (not to be confused 
with lx amongst whom there are additions each year from those just disabled). 

d x a = the number dying as active lives between ages x and x+1. 

d x =the number dying as invalid lives between ages x and x +l = Ix~H x ~""lx+i' 

i x =the number of active lives becoming invalid between ages x and x+1. 

p x = the probability of an active life aged x being alive one year hence, whether then act- 
ive or invalid. 

q x = the probability of an active life aged x dying within a year, whether still active or after 
becoming invalid, 

then px+Qx = l* 

p x =the probability of an invalid life aged x being alive one year hence. 

q x = the probability of an invalid life aged x dying within a year, 

thenpx+q x =l- 
p aa = the probability of an active life aged x being alive and active one year hence. 
p ai =the probability of an active life aged x being alive but invalid one year hence. 
q aa = the probability of an active life aged x dying while still active within a year. 
q ai = the probability of an active life aged x becoming invalid and dying within a year. 

r x = the probability of an active life aged x becoming invalid within a year, 
,1 aa i ai a aa i ai a ai i ai aa i aa ■» aa . ai i aa i ai * 

then p x +p x =p x ; q x +q x =q x ; Px +Qx =r *; Px +Qx =1 - r *; Px +Px +Qx +Qx =1 - 

r x =the absolute annual rate of invalidity, 

i x r x 





then r 


n ;ui x,aa 

D x =v l x . 


N'T = ZD™. 


D x ~ v l x . 


K =2D^. 


D* = v x l x . 


K =2DJ, 


C x =v*+'4 


M^Zpi. 


{ c x =v* + \. 


j M x =2'C X . 



lT-V2d? 1-Hq? 



215 

a* 1 = value of an annuity payable at the end of each year provided an active life now aged 

x is then alive but invalid, 
a* = value of an annuity-due on an active life payable during survival, active or invalid. 
a^ a = value of an annuity-due on an active life payable during activity, 
a^ = value of an annuity-due on an invalid life. 

n ax^? = value of a deferred temporary annuity payable at the beginning of each of t 
years deferred n years, pVovided the disability occur during the n years. 

a x E 7n| ;Z~^\ = value of an annuity-due on an active life for n years or for y — x years, which- 
ever is the shorter, during activity. 

Formulas for Reserves. Another commonly used method for determining the 
reserve at any age is by actual accumulation of premium receipts, less death losses. 
Thus, l x persons insured at age x each pay P x dollars annually in advance. The total 
payments for the first year are, therefore, l x XPx- 

This sum accumulates interest at the annual rate of i, and amounts, at the end of the year, 
to l x PxX (1 +i). The death losses payable at the end of the year equal d x dollars. Subtracting 
these losses, we have left l x P x (l+i) — d x . This remainder belongs to the survivors, who num- 
ber l x — d x , or l x +i; therefore, the share of each is 

i Multiplying both numerator and denominator by v x+1 , and remembering 

i x +i 



that l+i = — , we obtain — 
v 



l xV * Px __ v x + i dx D x p x -C x 

v x+1 l x+1 ' ° r D x+1 



D x C x 

If, now, we represent ^ by u x , and ^ x by k x , the expression becomes P x u x — k x , 
L> x+ i L>x+i 

which is the reserve to the credit of each survivor at the end of the first year. To find the 
reserve at the end of the second year, add P x , the second annual premium, and proceed as before, 
using u x+ i, and k x+ i in place of u x and k x . By continuing the process, the reserve at the end of 
any specified year may be ascertained. This is known as the retrospective method. 

A simple formula for obtaining the reserve on a continuous level annual premium 
for Whole Life Insurance is : 

3x <l X +n 

a* 

The required reserve accumulation on Endowment and Term Insurance is obtained 
by use of Temporary Annuities in a similar way as above indicated for the use of 
Whole Life Annuities in Whole Life Insurance. 

The prospective and retrospective methods will bring out identical results under 
the same assumptions of death rate and interest rate — otherwise not. The retrospec- 
tive formula is : 

,Px(N x -N x+n )-(M x -M x+n ) 



nV x = - 



D X4 



(N x — N x+n )-i-D x+n = n U x , which multiplied by the protection by P x , gives the accumulated 
contributions. (M x — M x+n )-J-D x+n = n K x , which multiplied by the protection gives the ac- 
cumulated claims. The difference is the accumulated reserve. 

In the following illustrations are shown the practical workings of three methods 
of computing reserves. Xos. i and 2 are applicable to any level premium contract 



216 

of insurance. No. 3, which is more rapid than either of the others, is, unfortunately, 
limited to whole life insurance, with continuous annual premiums, being, in fact, a 
special case of No. 2. All three illustrations are based on the National Fraternal 
Congress Mortality Table and four per cent interest, and the same entry age is 
assumed in each, so that the results may be compared with one another, and with 
the table of reserves in the appendix and "Friendly Societies and Fraternal Orders/' 
In No. 3, the reserves obtained are on an assurance of one dollar, and should, there- 
fore, be multiplied by 1,000 before comparison is instituted. When extensive reserve 
tables are to be computed by the methods of Nos. 2 or 3, the work will be greatly 
facilitated by the preliminary tabulation of A x+ i — A x in the former case, and of a x — a x +i 
in either case. Reserve at end of years is printed in italic figures. 



No. 1. 



10.34 



U20 = 1.0452 

P2oXu2o= 10.807 

k M = 5.025 

iV 2 o = (P 2 oXu 2 o)-k 20 = 5.78 

P*>= 10.34 

iV 20 +P 20 = 16.12 

u 2 i= 1.0453 

(iV 20 +P 20 )Xu 21 = 16.850 

k 21 = 5.061 

2 V 20 =( 1 V 20 +P 2 o)Xu 21 -k 21 = 11.79 

No. 2. 

A 20 = 211.86 

A 21 = 216.42 

A 2i — A 20 = 4.56 

a2o= 20.492 

a 2 i= 20.373 

a 2 o — a 2 i= 119 

P 20 = 10.34 

P2o(a 2 o— a 2 i) = 1 .23 

iV2o = A 2 i— Ajso+PuoCaM— a 2! ) = 5.79 

A 22 — A 2i = 4.73 

a 2 i — a 22 = 123 

P2o(a 2 i — a 22 ) = 1 . 27 

2V 20 =iV 2 o+A 22 -A 2 i+P 20 (a 2 i-a 22 )= 11.79 

A 23 -A 22 = 4.92 

a 2 a— a 2i = 128 

P2o(a 22 — a 2 i) = 1 .32 

3 V 2 o = 2 V 20 +A 23 — A 22 +P 20 (a 22 — a 23 ) = 18.03 



No. 2 — Continued. 

P 20 =... 10.34 

2V 2 o-f"P2o == 22.13 

u 22 = 1.0453 

( 2 V 2 o+P 2 o)Xu 22 23.133 

k 22 = 5.097 

3V 2 o=( 2 V 20 +P 2 o)Xu 22 -k 22 = 18. 04 

P 20 = 10.34 

3 V 2 o~hP2o == 28 . 38 

u 23 = 1.0453 

( 3 V 20 +P 2 o)Xu 23 = 29.666 

k 23 = 5.133 

4V 20 =( 3 V 2 0+P20)Xu 23 -k 23 = 24.53 



No. 3. 



a2o = 

a 2 i = 

a 2 o— 

1V20 

a 2 i— 

(a 2 i- 

2V20 = 



20.492 Multi- 
20.373 ply by 
.119 1,000 

00581 

.123 
00600 



a 2 i = 

= (a 20 — a 2 i) 4-a 20 = 

a 2 2= 

- a22; ■£■ a2o — 

= iV 2 o+(a 2 i — a 2 2)-ra 2 o= 01181 

a 2 2— a 23 = 128 

(a 22 — a 23 ) 4-a 2 o= 00625 

3V20 = 2V20+ (a 22 — a 23 ) -5- a 20 = 1806 

a23 — a24 = 133 

(a 23 — a 2 4)-s-a 2 o= 00649 

4 V 20 = 3V20 + (a 23 — a 24 ) -^ a 20 = 02455 

a24 - a25= 138 

(a 24 — a 2 5)^a 2 o= 00673 

5V20 = 4V20+ (a 24 - a 25 ) -5- a 20 = 03128 



AN EXAMPLE. 

The foregoing formulas were made from the benefits actually promised by com- 
panies and by societies. The last one now given will show how differently different 
persons will prepare formulas from a different view point of identical provisions in 
the certificate contract. 

The society in question promised to pay $1,000 at death prior to age 70 and attain- 
ing to age 70 promised a payment of $50, and at the beginning of each subsequent 
year for 9 years to pay a similar amount; that is, would pay $50 on attaining age 71, 
$50 on attaining age 72, 73, 74, 75, 76, 77, 78 and 79, being a total of endowments or 
annuity payments o>f $500 in ten equal annual instalments. Premium payments would 
continue until death, and were not altered on account of the decrease in the amount 



217 

of protection, due to the payment of the $50 annuities at and after age 70. The $500 
of protection against death was continued after the annuity payments were discon- 
tinued. Since the contributions were to be made unaltered at the level rate as of age 
of entry until death ; therefore, as seen from former formulas, the denominator in 
this case would be N*. The numerator, or the benefit side of the contract, would be 
a straight $1,000 death benefit to age 70, and then decreasing the death benefit by $50 
for each year to age 79 inclusive, and then continuing $500 death benefit from 79 to 
the end of life. i,oooM x will represent the benefit side to age 70. From 70 the death 
benefit will decrease $50 a year. According to former illustrations we must use the 
R column for the decreasing protection, and we would have, beginning the reduction 
at 70, 50 (R70— Rso). In the place of the decreasing amount of death benefit there is an annuity 
of $50, and, according to former illustrations, the annuity would be represented by the N col- 
umn, so that we would have a payment of $50 each year, and hence we would have $50 (N 70 — Ngo) ; 
therefore the complete enumerator would be 1,000M X — 50(R 7 o— R8o)+50(N7 — N$o) for the 
straight life and decreasing temporary insurance, and for the instalment of $50 annually from 
70 to 79 inclusive. These instalment endowments are of the nature of a deferred temporary 
annuity. We have seen that R can be written in the terms of S, and when substituted in the 
above numerator we would have R7o = vS7o— S71 and R8o = vSso— Ssi, whence 1,000M X — 50(R7o— 
R8o)+50(N7o-N8o) = l,OOOM x -50(vS 7 o-S7i-vS8o-S8i-N7o+N8o), but asSx is equal to S x+ i 
+N X , whence the last expression = 1,000M X + 50 (1— v)(S 7 o— Sso), but as 1— v equals d, 
this becomes l,000M x +50c? (S70— Sso), which is the formula that probably will puzzle the 
operator who went to the trouble of constructing the modified C and the modified M columns in 
order to obtain the results which are possible through the use of the last named simple formula . 
I It will be appreciated what may be done by the use of the commutation columns 
when it is stated that the operator who undertook to obtain the annual premiums for 
: the benefits above described modified the regular C column (as given in the appendix 
to this book for the National Fraternal Congress Table of Mortality) from 98 to 70 
by taking one-half thereof for all of the ages from 98 to 79, then for age 78 he took 
: eleven-twentieths of the regular C column and for 77 twelve-twentieths, and so on, 
increasing one-twentieth until and including age 70, where he had nineteenth-twentieths 
; of the regular C column. For age 79, and all ages younger, the regular C column was 
used. By summing this new C column he secured a new M column and used it in 
; the regular way for obtaining contributions with a decreasing insurance from 70 to 80, 
i and with a constant insurance from 80 to the end of life. 

AN ENGLISHMAN'S CONCLUSION. 

I shall conclude this chapter with a quotation from Thomas Fatkin, of Leeds, 

; England, who issued a 62-page pamphlet in 1906 in advocacy of teaching life insurance 

and annuity principles in the public schools, and undertook to demonstrate that the 

computations involved simple arithmetical processes, in connection with a "preparatory 

table," meaning "commutation columns :" 

The principles upon which hundreds of millions of pounds are financed in this 
country are only understood by a few competent men, who could probably be put in 
a single room of a small cottage. How long will the Board of Education let this state 
of things continue? 

It is probable that most of the 90,000 teachers could explain the following problem 
/ to their pupils : 

I ? * = 

V(H-2V30) V(7-2V10) V(8X4V3) 

But, at the same time, it is very possible that very few of them could solve the follow- 
ing problem: 



218 

Assuming that a teacher now 25 years of age desired to provide himself with an 
annuity of 50 pounds, payable quarterly, on arriving at 60 years of age, and in the 
event of death before 60, half the amount subscribed to be returned to his representa- 
tives. How much per annum should the teacher subscribe? 

I have shown that the solution of such problems are only simple arithmetical opera- 
tions — with the help of a preparatory table. 

In the "Advanced Course of Mathematics in the University Tutorial Series," a 
work used in our universities, and also used in the "University Correspondence Col- 
lege," for training students for the matriculation examination of London University 
and for higher honors, there are abundance of such problems as the above "Surd" 
problem. 

I notice only two problems in this great and deservedly popular work, which treat 
on two very simple questions affecting life Annuities and Assurances. The answers 
to both problems appear to be incorrect. I will give one of them, which appears on 
page 275. 

"A man aged 54 in the receipt of a pension of 100 pounds a year net, wishes to com- 
mute that for a present payment, interest being reckoned at 5 per cent. How much 
does he receive if his expectation of life is 17 years?" The answer given is 1,127.406 
pounds. 

If the eminent mathematical authors had put the problem' as follows : "A man 
aged 54, in the receipt of a pension of 100 pounds a year, certain for 17 years, wishes 
to commute that for a present payment, interest being reckoned at 5 per cent." The 
answer would be 1,127.4066 pounds, which can be ascertained from tables published 
above a century ago. 

The formula for the Annuity Certain is : 

Value of Annuity = ^^—^ = £1127.4066, 

a mere geometrical progression sum. 

The formula is not, however, applicable to Annuities on life, whatever may be the 
average number of years "Expectation." I allude to this problem because I believe 
that there are a great many arithmeticians, accountants, and financiers who fall into 
the same error. 

An eminent mathematician above 70 years ago wrote : "Many persons who have 
but an imperfect knowledge of the subject (i.e., Annuities) erroneously suppose that 
the value of an Annuity payable during the life of an individual is found by calculat- 
ing the value of an Annuity Certain for a number of years equal to the expectation of 
life of the individual." 

According to the mortality rate upon which my calculations are made (i.e., the 
mortality experienced amongst members of Friendly Societies as ascertained by the 
Government Actuary) a man at 55 has an expectation of future life of 15.904 years. 
If he have a pension of 100 pounds net, payable at the end of each year, what is the 
commutable value of the pension at 2^ per cent interest? 

t? 1 u c N <* 15646.0662 - tt nn ,™ 
Formula as before -- = ^^^ = £11.994277 

the value of £1 per annum X 100 = £1 199 8s 6.65d. 

Let any student work out the commutable value on the principle of taking 15.904 
years certain and 2}/ 2 < per cent as the basis of valuation as adopted in the mathematical 
work referred to and he will make the value 100 pounds too much. 

According to the Carlisle rate of mortality, a person at 29 years of age has an 
expectation of just 35 years, the commutable value of a pension of 100 pounds at age 
29 made upon a correct principle (Carlisle 2}/ 2 per cent) is £2,143 10s 7d. 

According to the data I have used in my calculations, Government Friendly Societies 
2.y 2 per cent, the commutable value would be : 

£2,142 is od, a difference of only £1 9s 7d as compared with Carlisle rate of mortality. 






219 

If worked out on erroneous principles, i.e., adopting the 35 years' "expectation" 
as a basis, the commutable value would be £2,314 10s 4d, or £172 9s 4d too much. 
This would be a serious difference if a few million pounds were invested in such a 
fund. 

How long will the Board of Education permit such simple formulae as those to 
which I have alluded to remain untaught in our public schools? 

DEFINITIONS. 

Insurance is or should be a provision for indemnity against loss. Fire Insurance 
is an indemnity against loss from fire ; Marine Insurance against loss by accident at 
sea ; accident Insurance against loss by accident either to the person or to property. 
Disability Insurance, which includes accident insurance, is to indemnify against loss 
of time, either due to sickness or accident which disables a person or prevents him 
from attending to his ordinary occupation. Sickness Insurance is to indemnify 
against loss of time by sickness, and is also included under disability. Life Insurance 
is to indemnify against loss from death; that is to say, the bread winner upon whom 
are dependent other persons, is of value to them, and should he die they will sustain 
a loss because of that event. Therefore, accepting the definition that insurance is to 
indemnify against loss, there can be or should be no insurance where loss will not 
result either from accident or disease or death or fire or storm or other causes of 
loss, as from burglary and for theft and for mistakes of different kinds. 

Insurance has been diverted from its proper channel by failure to confine it to 
indemnifying against loss. It occurs to me that personal insurance would be about 
perfect if a man were to insure against loss from death during the period in which 
he has dependants and when he is a support to some one; and during the same period 
he should insure against the loss of time through disability from accident or sickness, 
and during the same period, while he is able to earn not only a living, but to lay 
aside something, he should contribute to a deferred pension ; that is, he should make 
annual or monthly payments from his youth to old age, when there should be a dis- 
continuance of the contributions and also a discontinuance of the insurance against 
death and of the insurance against disability, and he should enter upon a pension or 
an annuity, or should have paid to him one sum in cash for investment and for the pro- 
tection of himself in old age. The trouble I have found in putting such a plan into 
operation is the desire on the part of Americans to have large amounts in the way 
of annuities or in the way of disability benefits. To give the amount of death benefit, 
and the amount of disability benefit desired by the ordinary workingman, when it 
comes to considering a contract of this character, and then an amount sufficient for 
his old age, as he considers it, the rate of contribution would come so high that it is 
beyond the ability of the ordinary workingman to pay. If a moderate amount of 
insurance protection in the way of death benefit, disability benefit and a pension for 
old age would satisfy the average American citizen, I should say that this combined 
protection would be the most satisfactory and certainly would meet the needs of the 
great majority of people. 

A Policy is the contract written by Life Insurance Companies. 

A Certificate is the contract written by Fraternal Beneficiary Societies. 

There is a material difference between a policy issued by Life Companies and a 
certificate issued by Fraternal Societies, due to the fact that the former is a fixed 
contract, and cannot be avoided during its term by the life company, while the member 
or policy-holder may discontinue or break his contract at his option. A certificate 
issued by the Fraternal Societies is not a fixed contract, but flexible. While it cannot 



220 

be voided during its term by the Society, and while the member may discontinue it or 
break his contract at option, yet there are obligations (while he is a member) upon 
the holder of the certificate which is not present in the provisions of the policy of a 
life insurance company. 

Policy and certificate contracts vary greatly, the same company or the same society 
issuing many forms of policies or certificates. 

The Ordinary Whole Life policy is one which promises to pay a death benefit 
or a disability benefit at death, or in the event of disability whenever it may occur, 
and the contributions continue until death. 

The Limited Payment contract is one where the contributions are limited either 
to one payment or to 10 payments or 15 payments or 20 payments, or as may be 
agreed upon at the issuance of the contract. The death or disability benefit is for 
the whole period of life similar to a benefit promised under an ordinary whole life 
contract. At the date when the contributions cease — that is, at the end of the premium- 
paying period — the reserve or accumulation on such certificates is equal to the single 
premium at the age at the end of the premium-paying period. 

Endowment Insurance is a contract promising to pay a death and disability ben- 
efit within a term of years, or at the end of the period to pay an endowment or an 
amount in cash or the amount of the certificate or policy by instalments. This is a 
combination of term insurance and pure endowment insurance as heretofore explained. 

Term Insurance is temporary insurance for a designated term or period, which 
may be for 5, 10, 15, 20 or any stated number of years, or to a designated age, as age 
50, 60 or 70. 

Renewable Term Insurance gives the privilege of renewing the insurance at the 
end of the given term, without medical re-examination, by contributing at an increase 
contribution rate for the renewed term. 

Convertible Term Insurance gives the privilege of converting or changing con- 
tracts without medical re-examination, but at increased contribution. The transfer 
should not be granted to a lower contribution rate for the same benefit. 

Instalment Insurance provides that the benefits shall be paid by instalments 
instead of one sum. 

Mortality Tables are the instruments, so to speak, which are used in the computa- 
tion of contribution rates for promised benefits. 

There are in existence numerous tables of Mortality. Some of these have been 
constructed from population statistics, and many of them from life insurance statistics. 
The latter are the ones in which we are concerned. There was published in 1783 
what is known as the North Hampton Table, which was constructed by Dr. Price 
from statistics in two parishes in the town of North Hampton. The Carlisle table 
was published in 1815, and constructed by Dr. Milne from the census of the popula- 
tion of two parishes in Carlisle in 1780, and the deaths in the same 
parishes from 1779 to 1787, inclusive. The population at the beginning of 
this period was 7877, and the deaths during the 9 years 1,840. A half a dozen Mor- 
tality Tables have been taken from the population statistics of Great Britain, espe- 



221 

daily in England. The original table is known as 'The Healthy English Table." It 
was formed by Dr. Farr from the census returns in 1851, and the record of the births 
and deaths from 1848 to 1853, inclusive, in 63 of the healthiest registration districts 
of England and Wales. In all of these districts the mortality of the general popula- 
tion did not exceed the rate of 17 annual deaths to 1,000 living, and at the census of 
1851 the total population of these selected districts was nearly one million persons, 
of whom about 493,000 were males and 503,000 were females. 

In 1834 Mr. Morgan published a table formed from the experience of the Old 
Equitable Society. In 1843 there was published the experience of 17 life insurance 
companies now known as the Actuaries or the Combined Experience Table. The 
statistics from which this experience was compiled embraced nearly 84,000 policies, 
running from 1762 to 1833, of which nearly 14,000 were terminated by death. In 1868 
Mr. Shepherd Homans constructed and published the American Experience Table of 
Mortality based upon the Experience of the Mutual Life Insurance Company of New 
York. This is the recognized standard mortality table of the United States for Life 
Insurance Companies, although valuations are permitted upon basis of net reserves 
derived from the Actuaries or the Combined Experience Table. In 1869 there was 
published in Great Britain what is known as the "Hm Table," meaning the experience 
of healthy males. About 180,000 policies were submitted, 11 per cent of which were 
on female lives. By excluding duplicate policies and female lives, the number was 
reduced to 140,000 healthy male lives. This Hm table was used almost exclusively 
in Canada and up to within recent years was used in Great Britain to the exclusion 
of any other table, excepting for annuities. Recently a new table has been published in 
Great Britain covering British assured lives from 1863 to 1893 and including all of 
the Life Insurance companies of that country. This is known as the O m Table. 
After excluding the lives during the first 5 years, there were 411,340 exposed to risk 
for 5,324,862 years. This table has been adopted in Great Britain and also by the 
Canadian Parliament in 1907 as a standard for life insurance for those countries. The 
Actuarial Society of America has recently instituted an investigation into mortality 
as influenced by large policies and by term policies and the nationality of the insured 
as well as the occupation, residence, family history and personal disability. The 
National Fraternal Congress Table of Mortality has been fully explained. There have 
also been constructed permanent total disability tables, the first one being constructed 

1 by me in 1902, and which is given in this book. Another and more recently con- 
structed table was from statistics furnished by me to Actuaries who combined these 
statistics with the American Experience Table. I have used the formulas adopted 
by the Actuaries in their construction of disability tables in -combination with the 

j American Experience Table, and give in this T)ook the second table constructed 
according to the formulas prescribed by the Actuarial Society, or at least which have 

; been accepted by that body. The original disability tables constructed by me are upon 
simple lines as compared with the complications of the second table constructed accord- 
ing to the formulas first worked out by an Actuary of Germany, and which has been 

j accepted, as stated, by the Actuarial Society of America. 

Of persons similarly selected within a given period of time out of a given number 
exposed to death a larger number will die at advanced than at younger ages. Common 

' observation will confirm this statement, and the reason for the fact is found in the 
natural law which fixes a limit to human life. 

The ordinary mortality table is constructed upon the assumption that the annual 
death rate increases with each year of advance in age. Represented by dollars and 
cents, the annually increasing rates of mortality (or probabilities of dying), given in 



222 

the aggregate mortality tables, are known as "natural premiums," because they are 
assumed to conform to the natural law that increases the insurance risk with the 
yearly advance in age. 

In reality these assumptions are not in strict accord with facts, but reflect a fiction 
of much greater value to the life insurance business than if the theory literally fol- 
lowed the facts. 

It is not true that there is a law of mortality as fixed and as definite as the law of 
gravitation, and it is not true that actual death rates amongst selected or unselected 
lives increase either regularly or progressively from year to year as age advances. 
Investigation and exposure of actual conditions show that 1 the death rates of insured 
persons are both irregular and erratic when compared for different ages and for 
different years. All that can be stated truthfully is thati the tendency to an increase 
in death rate with advance in age is present in every mortality experience after about 
age ten. For each of several years after birth the death rate decreases; then it 
increases for several years to about age eighteen; then the tendency is toward a slight 
decrease for about ten years, followed by an almost uniform rate for about ten or 
twelve years, after which the general tendency is toward an increase to about age 
fifty, with very marked and abrupt advances between ages fifty and seventy; while 
after the latter age there is considerable uniformity in the rate of increase for ten or 
fifteen years. An irregular line will fairly represent the rate at the very advanced 
ages, when men wear out and die from natural decay. 

A table of mortality constructed from the exposures to death of female lives will 
differ from one constructed from the exposure to death of* male lives in that the 
death rates of the former will be slightly higher for ages 15 to 25, and then somewhat 
lower for ages 25 to about 43, and then materially higher for ages about 43 to 50 
or 53; afterward for all older ages the female death rate is below that of males. 
In all experiences, that have come under my observation, there is a pronounced 
"hump" in the female, table for ages between 40 and 55. This is obviously due to 
the extra hazard from natural causes to which women in middle life are subjected. 
The unfavorable death rate for ages 18 to 25 is probably due to first child-birth, since 
it is absent in the experience of unmarried females. 

The mortality table is the result of smoothing out the irregularities of actual death 
rates at the different ages, and therefore merely represents averages, and is conse- 
quently a fiction though constructed from real mortality experiences. 

Little scientific use could be made of the actual facts, and hence resort to graded 
averages, rendering the fictitious results of more value than the absolute facts them- 
selves. 

Net Premium is the net charge to provide for the promised benefit without any 
provision for expenses. The net premium is erroneously assumed to be divided into 
two parts, namely — the mortality element and the reserve element. As a matter of 
fact, net premium to provide for a death benefit is all for mortality, and it is erroneous 
to conclude that it is divided in the office, a part going for term mortality and a part 
going for accumulation. It is true that this is the effect of practical operation, but the 
division is not made in the office, but is made through the payment of claims and 
contributions as they are received ; the excess being invested and accumulated at 
interest. If the premium were divided into mortality and reserve elements, then 
under a limited payment contract, when the contributions cease there would be no 
mortality element. When, as a fact, the accumulation becomes a single premium for 
the payment of mortality on the discontinuance of the contributions under a limited 



223 



bo-Jfc-3/z.o** SAT 




224 

payment policy or certificate. It has been shown that the net premium is computed 
without any reference to reserve accumulation, and it is only after the net premium 
has been determined that the reserve accumulation can be ascertained. The net pre- 
mium is in excess of the current cost of protection in the early years of the insurance 
contract, and in the later years the current cost of protection is in excess of the yearly 
net premium. This being true, it follows that in the early years there is an excess in 
contributions over the cost of the protection. This excess is laid away and accumulated 
at interest until the time when the cost of protection exceeds the yearly contributions 
when the accumulation is drawn upon to make good the deficiency. The diagram on 
the following page will clearly illustrate the working of the net premium. 

There are three net premiums illustrated, one of $7.46 for a term insurance to 
age 50; one for $12.04, the annual premium for term insurance to age 70, and $16.62, 
the annual net premium for whole life insurance on a person at age 35. The first 
horizontal line marked $7.46 represents the level annual net premium for term insur- 
ance to age 50; the horizontal line marked $12.04 represents the net level annual pre- 
mium for term to age 70, while the horizontal line marked $16.62 represents the level 
whole life annual premium for a person at age of entry 35 and promising $1,000 pay- 
able at death whenever that event occur. Under the whole life policy and (provided 
the event occur prior to age 70 or age 50) under the term contract, the diagonal 
line marked YZ represents the annually increasing cost of protection, beginning at 
$6.15 in the first year of age 35-36 and increasing annually to the end of life or to 
the end of the term of protection. The values represented by the diagonal line below 
the horizontal lines represents the period when the annual level contribution rate 
exceeds the annually increasing cost of protection. And the triangles to the left of 
the diagonal line, as explained in the diagram, represent the accumulated surplus 
when the contributions are in excess of the cost to make good the deficiencies repre- 
sented by the triangles on the right of the diagonal line when the cost of protection 
exceeds the annual contribution. The amount of excess contribution is largest in the 
first year of insurance, and it decreases with the increase in the cost of protection 
until at the point where the diagonal line crosses the horizontal lines, when the cost 
of protection is equal to the annual level premiums. Above the intersection of these 
lines the cost of protection is in excess of the annual contribution, when there is a 
deficiency that is made good by drawing upon the accumulation from the previous 
excess contributions and interest. 

The Loading of an insurance contract is the designation commonly used in referring 
to the amount added to the net premium for expense purposes. I have explained this 
matter in the chapter dealing with expenses. 

The Natural Premium and the Level Premium I have also explained in previous 

AND SUBSEQUENT pages. 

The Reserve ordinarily is the required accumulation to maintain the contribution 
rates level and uniform during the period of protection as illustrated in the foregoing 
diagram, where for a term insurance to age 50 the reserve accumulation is represented 
by the triangle with the apex at A. The accumulation for term insurance to age 70 
is represented by the triangle with the apex at B, while the reserve accumulation on a 
whole life insurance is represented by the triangle with the apex at C. It will be 
observed that the reserve accumulation varies with the duration and the period, of 
protection. It also varies with the character of the contract. For example, a con- 
tract for term insurance to age 50 requires a very much less reserve than a whole 



225 

life contract, and an endowment insurance requires a much larger reserve accumula- 
tion than the whole life. The reserve accumulation on an endowment insurance is 
of a two-fold] character ; one part is for the purpose of maintaining the contribution 
rates level and uniform during the period when death benefit is promised and the 
other is for the accumulation of the endowment at the end of the period. So also 
is the reserve on limited payment contracts of a dual character, in that it is a reserve 
for a term insurance during the premium-paying period and a reserve accumulation 
for the purpose of providing a single premium at the end of the premium-paying 
period. As a matter of fact, whole life insurance may be considered as a term insur- 
ance to the limiting age of the mortality table, with an endowment to the survivors at 
that age; therefore, the reserve could be considered as of dual character, in that it 
would provide for term insurance to the end of the mortality table and for the endow- 
ment payable to the survivors at that age. The reserve accumulation not only depends 
upon the character of the contract and the duration of the period of protection, but 
also upon the rate of interest and mortality assumption in the computation of the 
contribution rates. However, there may be identical reserve accumulations where the 
interest assumption is the same, but the mortality assumptions are different. To 
illustrate this point, I give the yearly cost of insurance or death rate per $1,000 accord- 
ing to three different assumed tables ; the first being designated as "Normal Mortality/' 
the second "Sub-Normal Mortality," and the third "Super-Normal Mortality." That 
is to say, taking the first table as normal, the second one being lower is termed sub- 
normal and the third one being higher is termed super-normal. I give below the 
annual death rate per $1,000 for every five years from age 20 to 95 inclusive: 

Death Rate Per 1,000. 





Normal 


Sub-normal 


Super-normal 


Ages 


Mortality 


Mortality. 


Mortality. 




(1) 


(2) 


(3) * 


20 


5.72 


3.57 


7.97 ' 


25 


7.07 


4.82 


9.43 


30 


7.71 


5.33 


10.20 


35 


8.62 


6.08 


11.28 


40 


10.01 


7.27 


12.89 


45 


12.24 


9.21 


15.42 


50 


15.72 


12.34 


19.27 


55 


21.23 


17.37 


25.28 


60 


29.83 


25.31 


34.58 


65 


43.27 


37.84 


48.97 


70 


64.10 


57.40 


71.13 


75 


96.04 


87.56 


104.95 


80 


144.26 


133.25 


155.82 


85 


215.22 


200.69 


230.48 


90 


315.79 


296.47 


336.08 


95 


449.61 


424.28 


476.21 



When the reserves are worked out by the mortality tables, for which the above 
death rates are given, it is found that they are identical. That is to say, that at the 
end of each year the terminal reserve is the same whether we assume normal mortality, 
sub-normal or super-normal mortality. On a 3 per cent basis the following are the 
annual premiums per $1,000 deduced from the three tables. It will be found that the 
premiums of the sub-normal mortality are lower than those derived from normal, 



226 



while those from the super-normal are higher than those from the normal, as will be 
seen from the following : 

Annual Premium Per $1,000. 





Normal 


Sub-normal 


Super-normal 


Ages. 


Mortality. 


Mortality. 


Mortality. 




(1) 


(2) 


(3) 


20 


14.23 


12.17 


16.40 


25 


16.28 


14.12 


18.55 


30 


18.73 


16.45 


21.13 


35 


21.86 


19.43 


24.41 


40 


25.89 


23.27 


28.64 


45 


31.15 


28.28 


34.17 


50 


38.09 


34.88 


41.45 


55 


47.37 


43.73 


51.21 


60 


59.97 


55.73 


64.43 


65 


77.32 


72.24 


82.63 


70 


101.49 


95.27 


108.03 


75 


135.51 


127.66 


143.73 


80 


183.54 


173.42 


194.19 


85 


250.87 


237.54 


264.91 


90 


343.19 


325.48 


361.81 


95 


462.34 


438.81 


486.87 



For emphasis let me repeat that when the reserves are worked out on the 'basis 
of the above contribution rates and the mortality assumed in the respective tables, it 
is found that they are identical ; that is to say, the terminal reserve accumulated at the 
end of each year is the same whether we assume normal mortality, sub-normal or 
super-normal mortality, but assuming the rate of contribution as above given. How- 
ever, if we use the normal mortality in connection with the sub-normal contribution 
rates, then, of course, the reserve accumulation would be different from that where 
wc Use the sub-normal mortality in connection with the sub-normal contribution. 
Were we to employ the normal mortality in a valuation, while having as a basis the 
contribution rates of the sub-normal mortality, then the reserve would be inadequate. 
This reference is of importance, because of the often expressed idea that the net 
reserve accumulation is the same or about the same whether we make the valuation 
on the basis of the American Experience Table of Mortality, or on the National Fra- 
ternal Congress Table of Mortality. This is true only when the contribution rates 
are taken as derived from the respective tables. Were we to make a valuation on the 
basis of the contribution rates of the National Fraternal Congress Table, while em- 
ploying the American Experience Table of Mortality as the basis for the valuation, 
then we would find that the reserve would be inadequate, but if we were to make a 
valuation, using the contribution rates derived from the National Fraternal Congress 
Tabic and employing contribution rates according to that table, we should obtain 
reserve accumulation about the same as when we employ the contribution rates 
derived from the American Experience Table of Mortality and based on the valuation 
upon the death rate according to that table. This may be better understood by making 
an example from the three tables above given. 

It will be observed that the annual rate on 3 per cent basis by the sub -normal 
mortality table for age 20 is $12.17 per $1,000 of protection, while the annual net rate 
per $1,000 according to the super-normal is $16.40. Here there is a difference of 
$4.23 per $1,000 in net premiums, and yet the reserve accumulation at the end of any 



227 

year is identical for both premiums ; that is to say, the reserve accumulation for a 
net premium of $12.17 at the end of, say the tenth year, employing the sub-normal 
mortality assumption in the determination of the amount, is identical with the reserve 
accumulation by the premium of $16.40 at the end of the tenth year. In other words, 
as a standard of net valuation, the table which produces the lower premium would 
give as large an accumulation, as a measure of commercial solvency, as would the 
table which produces the larger premium. Similarly the same reserve would be accu- 
mulated by the premium of $14.23, which is derived from the normal mortality table. 
The example will emphasize this statement : 







Entry A^e 20. 








Annual 
Premium 


Value of $1,000 

Insurance, End 

of 10th Year. 


Value Future 
Premiums. 


Required Accu- 
mulation, End 
of 10th Year. 


Normal 


$14.23 
12.17 
16.40 


$342.00 
312.00 
370.00 


$299.00 
269.00 
327.00 


$43.00 


Sub-normal 

Super-normal 


43.00 
43.00 



All of the above values are based on 3 per cent interest assumption. The above 
accumulation at the end of 10 years is much less than the reserve of the American 
Experience, the National Fraternal Congress or the Actuaries' Table of Mortality 
with 4 per cent interest assumption. The reserves per $1,000 being, respectively, 
$65, $69 and $73. I* will be observed that the reserve by the National Fraternal Congress 
Table is $4.00 higher than that of the American Experience and $4.00 less than that 
oi the Actuaries' Table. Later on this showing will be given further attention. 

In practical operation the largest reserve accumulation is required on the protection 
for the members at advanced ages, because ordinarily it is of the longest duration. 
In total amount the required reserve accumulation is largest for the middle ages, 
because in the course of operation the membership of any large insurance company 
or society is greater at these ages, with the tendency, of course, to mass the member- 
ship always at the more advanced ages. In this connection it will be interesting to 
reproduce a diagram made by Carlan A. Brown, Grand Master Workman of the 
Massachusetts Ancient Order of Workmen, in an article published in Vol. 2 of '.he 
Criterion. He gives the ages attained and the number of members and illustrations 
for the grand jurisdiction of the Ancient Workmen of Massachusetts, for the years 
1885, 1890, 1895, 1 901. The diagram graphically represents the distribution of mem- 
bership and the progress toward massing at the advanced ages. The membership is 
divided into three sections for ages 18-44, 45"54> and 55 and older. A more striking 
illustration could not be made of the passing of members from the maximum age of 
admission into the higher ages. The diagram tells the tale of increasing mortality 
cost and the reason for increasing rate or the number of assessments under defective 
plan. The purpose of the illustration was to show that the number of assessments 
which would provide for the mortality claims in 1885 when the membership was at 
the younger ages would not provide for the claims in 1890, when they had progressed 
toward the advanced ages, nor in 1895, when the massing of the members was still 
greater at the advanced ages, and especially would be inadequate in 1901 when the 
number of members older- than, age 55 would exceed the total number of members 
below age 50 in 1885. I reproduce the diagram for its educational effect in many 









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229 

directions. In this connection I also reproduce an article furnished to May and June 
issue of the Criterion in 1904 by Professor S. A. Still-well, Actuary then and now for 
the Ohio Insurance Department. This article relates to reserve accumulation under 
the American Experience Table of Mortality, the National Fraternal Congress Table 
and the Actuaries' Table, and is supplemental to the showing made for the normal, 
sub-normal and super-normal mortality tables. 

In an exhibit of reserves in the Criterion of March-April, credit is given me for 
the special method of exhibiting these reserves at different ages on the three mortality 
tables — American, Actuaries', and National Fraternal Congress — with compound inter- 
est at same rate in all cases. The purpose of the exhibit would, I think, be more 
readily seen if, while retaining the same figures and headings, the National Fraternal 
Congress reserves were put in the dark-faced type and the Actuaries' reserves in 
italics, as below (leaving the American in ordinary type), as one can follow the dark- 
faced type more easily than the italics. The dark-faced type will be found to be sand- 
wiched, as it were, almost throughout between the other two. Only at the attained 
ages from 50 to 65 would the dark-faced type move up into the first or lowest place 
in the reserves. I hardly need state that these reserves are for whole life policies 
with level rates : 

Four Per Cent Accumulation on $1,000. 
Entry Age 20. 

At End of Years— 



1 


2 


3 


4 


5 


10 


15 


20 


25 


30 


35 


40 


45 


50 


55 


60 


5 


11 


1 


23 


29 


65 


108 


159 


220 


291 


371 


455 


541 


624 


696 


760 


6 


12 


18 


25 


31 


69 


114 


167 


228 


296 


373 


456 


542 


626 


704 


776 


6 


13 


19 


26 


33 


73 


119 


173 


236 


307 


384 


465 


546 


629 


707 


779 



Entry Age 40. 



At End of Years — 



1 


2 


3 


4 


5 


10 


15 


20 


25 


30 


35 


40 

/ 


45 


14 


28 


42 


57 


73 


156 


247 


346 


449 


545 


632 


710 


780 


14 


28 


43 


58 


73 


157 


252 


352 


451 


551 


648 


734 


808 


U 


29 


45 


61 


77 


163 


256 


353 


456 


556 


648 


735 


814 



230 

To illustrate to the eye the slight variations in values, lines are drawn below for 
age 20, showing reserves by the three tables for several quin-quennial years, and 
extending to the attained age of 80. The continuous line represents the National 
Fraternal Congress line of reserves ; the dotted line represents the American, and the 
dashed line represents the Actuaries'. Similar lines may be drawn for other ages 



? 














^ 


c» 


^ 


<*\ 


Os 


-^ 


o<r 





s> 





^ 


^> 











a 


^ 





p 





For earlier years and later year of policies than are given in the chart, the National 
Fraternal Congress line runs between the American line and the Actuaries' line. It 
will be observed, by following closely the dotted line and the dashed line that the 
American and Actuaries' reserves are determined not to be on friendly terms, for 
when one approaches the other it is not to coincide with it, but to cross it and remain 
as far apart as ever. It is only at or near this crossing point of the American and 
Actuaries' reserves that the National Fraternal Congress reserves fall below the other 
two. If it be said that the National Fraternal Congress reserves are erratic at this 
place, then it may also be said that the other two — American and Actuaries' — are 
somewhat unsteady. If the lines be examined closely it will be found that the Amer- 
ican and National Fraternal Congress lines almost coincide throughout their entire 
extent. The differences between the lines are indicated in the chart by small numbers 
placed below and above the three lines. 



231 



A table of differences below will show how much more closely the National Fra- 
ternal Congress reserves follow the American than they follow the Actuaries' : 

For Ace 20. 





Difference Between N. F. C. 


Difference Between N. F. C. 


At End of Years — 


and American. 


and Actuaries'. 


5 


+$2.00 


-$2.00 


10 


+ 4.00 


- 4.00 


15 


+ 6.00 


- 5.00 


20 


+ 8.00 


- 6.00 


25 


+ 8.00 


- 8.00 


30 


+ 5.00 


-11.00 


35 


+ 2.00 


-11.00 


40 


- 1.00 


-10.00 


45 


- 1.00 


- 5.00 


50 


- 3.00 


+ 2.00 


55 


+ 3.00 


+ 11.00 


60 


+ 3.00 


+ 19.00 



Where both columns are minus ( — ) the National Fraternal Congress reserves 
fall slightly below the other two, and where both columns are plus ( + ) the National 
Fraternal Congress reserves are higher than the other two. 

Below will be found an exhibit of net life level rates by the three mortality tables 
with four (4) per cent compound interest, and the percentages to be taken of the 
Actuaries' to produce the National Fraternal Congress, and the same with respect to 
the American, showing that in no instance is the National Fraternal Congress net 
level rate less than eighty (80) per cent of that by the American or Actuaries' : 



Ages. 


Actuaries' 

4% Net 

Level Rates. 


American 

4% Net 
Level Rates. 


N. F. C. 

4% Net 

Level Rates. 


Ratio of 
N. F. C. to 
Actuaries. 


Ratio of 
N. F. C. to 
American. 


20 
30 
40 
50 
60 


$12.95 
16.97 
23.68 
35.78 
57.56 


$12.67 
16.21 
22.35 
33.70 
55.45 


$10.34 
13.96 
20.11 
30.91 
51.13 


80.0% 

82.1% 
84.8% 
86.3% 
88.7% 


81.4% 
86.2% 
89.8% 
91.7% 
92.1% 



Comparing also the National Fraternal Congress 4 per cent net life level rates 
with the same by the American mortality table and 3 J / 2 per cent interest (which is now 
the basis for rates in nearly all the old line companies), we obtain the following table: 



Ages. 


American 3^%. 


N. F. C. 4%. 


Ratio. 


20 
30 
40 
50 
60 


$13.48 
17.19 
23.50 
34.99 
56.83 


$10.34 
13.96 
20.11 
30.91 
51.13 


76.6% 
81.2% 
85.6% 
88.3% 
90.0% 



Hence, except at very early ages, the National Fraternal Congress 4 per cent net 
life level rates are greater than 80 per cent of the American 3V2 per cent net rates. 

Expectation of Life means the average number of years which persons of a certain 
age will survive. It has no relation to the time the individual will probably die, nor to 
the time when death is most probable. The individual may die today or tomorrow or 



232 

25 years hence, while his life expectancy may be 10 years or 20 years or 40 years. To 
find the years of life expectancy, sum the number in the column of members living 
given in the mortality table from the age one year older than the given age to the end 
of the table, and then divide the total by the number living at the given age. This 
will give what is known as the curtate expectation of life. The complete expectation 
is obtained by adding five-tenths to the number of years for the curtate expectation. 

Insurance Cost. The illustrations given correspond to the natural premiums or 
probabilities of dying per 1,000, as given in table 1 of the appendix to this book. 
Technically, and as given in the text-book, insurance cost is a product of the prob- 
ability of dying by the difference between the sum insured and the reserve accumu- 
lation. 

For example, Suppose there are one million of insurants at age 35, and at the end 
of the year on whole life certificates there is $11.20 per $1,000 reserve accumulation, 
or $11,200 on the $1,000,000 of protection. If we subtract the $11,200 from the 
$1,000,000 we have remaining $988,800 which is technically called the amount "at risk;" 
that is to say, it is assumed that the company holds $11,200 of the funds of members, 
and consequently the amount at risk is the face value of the certificates less the 
reserve accumulation, making as stated, net amount at risk of $988,800 on the $1,000,000 
of protection. The probability of dying at age 35 is .00615, and multiplying this by 
the $988,800 we obtain $6,081 as the cost of insurance on $1,000,000 of protection, or 
$6.08 per $1,000. 

It may be further added that if the cost of the protection is $6.08, and the whole 
life level net premium at age 35 is $16,62; if we improve the latter for one year at 
4 per cent, we get $17.28, and subtracting the cost of protection, $6.08, we have $11.20 
per $1,000 as the reserve accumulation, or as first stated, $11,200 on $1,000,000 of 
protection. 

Taking $6.15 per $1,000 as the cost of protection, the following example will 
illustrate the method of determining the reserve accumulation. We will take the 
tabular number living, 92,215, at age 35, and assume that each one carries $1,000, and 
that the annual net contribution is $16.62, then we have the following exhibit : 



92,2i5X$i6.62=Premium Payments $1,532,613.30 

Interest at 4 per cent for 1 year 61,304.50 

Premium and Interest end of first year 1,593,917.80 

92,2i5X$6.i5r=Death Claims 567,000.00 

Accumulation end of year 1,026,917.80 

We began the year with $92,215,000 protection and there was $567,000 in claims, 
leaving at the end of the year $91,648,000 of protection. Dividing the $1,026,917.80 
by 91,648 we obtain the reserve at the end of the year, which is $11.20 per $1,000, and 
precisely the same as obtained by the method of subtracting the cost of the protection 
as technically determined from the annual premium and accrued interest for one year. 

If the single premium of $301.67 is illustrated, instead of the annual premium of 
$16.62, we would have this example : 

92,2i5X$30i.67=premiums $27,818,663.44 

Interest one year 1,1 12,746.54 

Interest and premium 28,931,409.98 

92,2i5X$6.i5=claims 567,000.00 

Total accumulation 28,364,409.98 

Divided by 91,648 309.49 

or the single premium at end of the first year which is the reserve for the 91,648 
survivors of the original 92,215 entrants. 






233 

In every case the results of the two methods in respect of reserve accumulation are 
identical, and since there arc advantages to be gained by assuming that the cost of 
protection is the product of the probability of dying by the difference between the sum 
insured and the reserve accumulation, I would not occupy space to give my view con- 
cerning the matter were it not that a principle is involved in regard to the conduct 
of Fraternal Beneficiary Societies under existing conditions. 

However, from a technical standpoint, I contend that the above illustration which 
assumes that the probability of dying corresponds to the cost of protection is in 
accord with actual practice. 

In no office do officials pay a part of the claims from current contributions and 
then make draft upon the reserve accumulation for a portion of the claims. As a 
matter of fact, the claims are paid out of current contributions, and the reserve accu- 
mulation is permitted to remain invested for the benefit of the survivors. 

I assert that the method illustrated, being in accord with practice, is the better one, 
and is technically correct. 

If we analyze the individual position of one of the survivors, this is found : 

Premium Payment $16.62 

Interest= ($i6.62X.<h) 66 

Premium and Interest 17.28 

Share of Claims 6.15 

Surplus from Premium and Interest 11. 13 

Mortuary Accretion 07 

Reserve $11.20 

The "mortuary accretion" comes from the share of each survivor in the surplus 
from contribution and interest of the 567 who died. Each one of the 567 paid $16.62, 
which earned 66 cents, and the total of $17.28, less $6.15, the share of each in the 
claims, yielded a surplus at the end of the year of $11.13, exactly the same as for each 
survivor. The total for the 567 who died was : 

567X$n.i3X$6,3ii.oo, 

and 6,31 1-^91, 648=1.07 for each survivor, which added to the surplus for each, $11.13, 
makes the reserve $11.20. 

The contention that the reserve belongs to the member has led many to the con- 
clusion that it should be returned in addition to the sum insured. This conclusion 
could not result from the true exposition that, under ordinary computations, the reserve 
is not to be paid to beneficiaries of deceased members, but upon the assumption that 
it will be appropriated for the benefit of survivors in the way of "mortuary increment. ,, 

At the advanced ages the "mortuary increment" is much larger than the "interest 
increment" for accumulation. 

My contention is supported further by the general employment of the u and k 
columns in computing reserves. With these factors the reserves per $1,000 are deter- 
mined precisely as illustrated for the $16,62 annual rate where $92,215,000 were 
involved. In the illustration the $567,000 of claims were paid from the current con- 
tributions, including $6.15 per $1,000 paid by the 567 who died. The $11.20 of accu- 
mulation was retained in the reserve fund for the benefit of the 91,648 survivors. 

In computing reserves per 1,000, the accumulation factor, u, corresponds to 
the interest factor in the illustration, while the decrement factor, k, corresponds to 
the deductions for claims. The u and the k are larger than the interest and mortality 



234 

rates in order to account for the "mortuary increment." The u and k factors are thus 
developed : 

Let 135= 92,215 = Insurants at age 35. 
P 35 = $16. 62 = Premium. 
1 +i = 1 . 04 = (i = interest) . 
d 36 - 567 = Members died. 
iV35= Accumulation or reserve. Then 

l35XP35X(l+i)— d 3 5 = lV 3 5. 

From the illustration it was seen that the total reserve accumulation at the end of 
the year, $1,026,917.80, was divided between the 91,648 survivors, giving $11.20 to each 
per $1,000 of insurance. Now let 

l 3 e = survivors = I35+1, 
then 

l3 5 XP35X(l+i)-d35 ^ lV35 

I36 I36 

but, 

135 1 A 1 d35 d35 135- 

p = — • And- r = T -Xi— 

136 P35 h& I35 I36 
substituting, we have, 

P 35 X — = 3i5 = P 35 Xu 3 5-k35 = lV 3 5. 

P35 P35 

By reference to Table 1, we find q 3 5 = . 0061487 :p 3 5 being its complement = .9938513. Substi- 
tuting, we have P 35 X 1.04 -r- .9938513 = 1.04643 = u 35 , and .0061487-^.9938513 = .006187 and 6.187 
= l,000k 35 . Making an example, we have, 

P 35 = Premium $ 16.62 

U35 = Accumulation Factor 1 . 04643 

P35Xu35 = Accumulation end of year 17.39 

k 35 = Decrement Factor 6.19 

1V35 = Reserve at end of first year 11.20 

Very generally the u and k columns are employed to calculate in advance the 
reserves per $1,000 for use in "net valuations," and, as seen, the k is directly derived 
from the probability of dying, or death rate, and this is the decrement factor as was 
q x in the first illustration. 

Notwithstanding the apparently good arguments to support my position, I stand 
alone in undertaking to maintain it. 

Elizur Wright, in 1850, asserted that the reserve was of the nature of a savings 
bank deposit, and when the insured saw fit to break his contract he had a right to 
demand the surrender of his reserve (less a reasonable surrender charge), and from 
that time to now an individual interest in the reserve has been recognized. 

In such circumstances it was natural to develop the theory that the insurance 
company held the reserve in trust to be paid to beneficiaries at the death of the mem- 
ber, or returned to the member on his withdrawal. In this view the reserve is truly 
a "reinsurance fund," belonging to the insured as much as a bank deposit. 

If carried to this logical conclusion, then there should be an individual accounting 
and a right of withdrawal of credits on notice. 

I cannot subscribe to such a theory. It would be subversive of insurance principles. 

Present payments to provide for the inevitable future increase in the cost of insur- 
ance are as much the property of the society or company as present payments for 
current insurance cost. While present payments for future cost represent present 
over-payments of current cost, later on as age increases current cost will exceed the 
then present payments, and a deficiency will result between current collections and 



235 

current claims, when the previous advance payments are brought into requisition to 
cover the deficiency. The early excess contributions over current cost are absolutely 
necessary under the level premium plan, and are as much a part of the insurance 
funds as are the portions of contributions used for current cost. If the insured 
desires to change or annul his contract, by agreement that will not injure the society 
or company, a return might be made of the excess accumulation. 

I arrive at the equity of surrender values from a different course of reasoning. 
Thus : 

All insurance is cooperative, the very object of it being to distribute losses. 

It proceeds on the theory of averages, and, therefore, an insurance society which 
is scientifically operated assumes as a unit the entire group of members who enter at 
a particular age, during a particular year, on the same form of contract. 

All payments made by members of the group are treated as items of an individual 
account. 

The term ''individual reserve" is largely a misnomer, as it simply means the share 
of each individual of the group in the entire reserve for the group. It becomes of 
importance chiefly when a member desires to change the form of his contract from 
whole life protection; for instance, to temporary protection, the latter requiring a 
smaller reserve. It is necessary in such circumstances to make an individual adjust- 
ment with this particular member, which is done by returning to him his individual 
share of the reserve, according to his previous contract, or a definite portion thereof: 

Let us suppose that he entered originally at age 30 and desired a life contract under 
the level premium system. The net annual price charged him would be $13.96 annually, 
by the Natnonal Fraternal Congress Table, and four per cent interest. 

At the end of twenty years he decides that he no longer wants the protection. 

Had he originally applied for a twenty-year contract, he would have been charged 
only $6.80 annually. 

He has, therefore, paid $7.16 a year in excess of the amount required for the pro- 
tection furnished. 

This excess, at least in part, may be returned if the demands of equity are to be 
satisfied. 

The larger premium was collected on the assumption that the member's certificate 
would eventually become a claim. 

This assumption is nullified by his withdrawal, and the accumulation provided in 
conformity therewith may not be retained. 

When the member dies, on the contrary, the assumption still holds. There is no 
change in the contract. The certificate becomes a claim. In what year this latter 
occurs is immaterial. 

Were it not for the uncertainty of the date of death there would be no such thing 
as life insurance. 

The insured persons enter into mutual agreement, under the terms of a whole life 
iunsrance contract, to remain in the association until death, whether it occur soon 
or late. 

The rates of contribution are based upon persistence until death, and upon such 
conditions they are adequate to provide for the payment of promised benefits at 
death. 

A payment of more than the promised benefits, by a return of a portion of the con- 
tributed assessments, would upset all calculations and render the rates of contribution 
insufficient to provide for the payment of the future promised benefits. 

Maturity of the whole life contract by death fulfills the conditions and terms of 
the agreement. 



236 

The surrender of the contract abrogates the terms of the original agreement, and 
renders unnecessary the fund which has been accumulated to insure its integrity were 
it continued to maturity at death. 

So long as the contracts of insurance are in force, accumulated funds must be held 
in common and cannot be considered as "individual deposits/' of the same character 
as "deposits in a savings bank." 

Much misconception of the character and function of the reserve fund has resulted 
from efforts to explain it. 

The first wrong impression came from the so-called "division of the level premium 
into its three elements — Expense, Mortality and Reserve." 

Taking age 40 and an "Old Line" premium, for example, this "division" was made : 

Gross Expense Mortality Reserve 

Premium Element .Element Element 

$3L57 $7.89 $9.82 $13.86 

To this day there are many who believe the above to be a permanent division, and 
that annually the amount of $13.86 is set aside from the gross premium for continuous 
accumulation into a reserve fund, "which goes on accumulating from generation to 
generation long after those who have contributed to it have passed away." 

It is not unusual to find the serious, and evidently honest, statement in the litera- 
ture of Fraternal Societies, that "the principal of the reserve accumulation is never 
touched — only the interest is used to keep down the increasing cost at old age." 

This misapprehension largely proceeds from two sources. 

(1) The erroneous impression made by such as the foregoing "division" of the 
level premium. 

(2) The superficial consideration given to the workings of the reserve by those 
who essay to discuss it. 

For the purpose of net valuation, terminal reserve values have been computed, and 
these values have been very generally published, and are often used in making com- 
parisons of Mortality Tables, as well as for many illustrations in life insurance discus- 
sion. 

Such publication and use are appropriate and of material benefit, but, unfortunately, 
they have led those who jump to conclusions into very erroneous statements. 

The truth of it is, the breaking up of the reserve fund into individual credits or 
values can only serve for analytical purposes, and for accounting between "tenants in 
common" when the Common Fund is to be divided or apportioned. 

So, also, is it a purely analytical process when the level premium is split into its 
"elements" of "Expense," "Mortality," and "Reserve." 

No practical results can be arrived at by considering the reserve as "an individual 
deposit," nor in viewing it as separate and distinct from the "Mortality" element. 

It would be equally practical to endeavor to make separate use of hydrogen and 
oxygen and obtain the results derived from water, as to try to work out life insur- 
ance problems by separately considering the "Reserve" and "Mortality" element of a 
level premium, or by undertaking to break up the general reserve accumulation into 
individual credits of the nature of deposits in bank. 

There are but two parts to a level premium, which are the "Expense" portion and 
the "Mortality" portion. 

The "Reserve" element is a fiction — a product of analysis. 

When the expense portion is deducted, the balance (called the "Net Premium") is 
provided, by calculation, for the payment of death losses, for "Mortality" purposes, 
and for nothing else. 



237 

If the death losses are less than anticipated, there results a surplus which may be 
returned to members. 

However, the whole of the "net premium" is primarily intended solely for the pay- 
ment of death claims, and there are no pre-determined portions of it for "Mortality" 
and "Reserve." 

The idea should be gotten rid of that there are "Reserve" and "Mortality" elements 
to a level premium, if there is to be a clear conception of its real and true function. 

The idea should be gotten rid of that the so-called reserve accumulation is a fund 
of individual credits, if its true function is to be understood. 

The level premium- plan, subjected to critical analysis, will reveal the following 
conditions as a business proposition : 

First, the individual insurant, as such, is not considered in the determination of the 
level premium. It would be a gambling venture pure and simple to undertake to insure 
one life or to enter into an insurance contract with one person. 

Second, it requires a considerable number of persons associated together in mutual 
cooperation for practical and successful insurance business conduct. In such circum- 
stances only the mass is considered in reference to contributions, and necessarily all 
resulting accumulations constitute a fund in common against which individual demand 
could not be made unless the association went into liquidation, and then each member 
should share in the general distribution according to the character of contracts carried. 

As stated, I have made an argument in the case because of the importance to the 
Fraternal Societies. It is of small moment to life companies whether the one or the 
other explanation of the working of the level premium is correct. But the very exist- 
ence of many of the Fraternal Societies depends upon the construction that will 
maintain their funds in common for the sole purpose of providing for the payment of 
claims. 

If voluntarily or through compulsion, Fraternal Societies undertake to segregate 
the funds and allow credits to individual members, they must abandon the original 
conception of fraternal protection, and should base their contribution rates on a 
higher table of mortality than that of the National Fraternal Congress and 4 per cent 
interest assumption. 

The Net Value of a certificate or policy corresponds to the reserve accumulation. 
To put it another way, the net value represents the difference between the present 
value of the benefit and the present value of future contributions, under the prospec- 
tive method of valuation. Under the retrospective method of valuation the net value 
is represented by the difference between the value of accumulated claims and the value 
of accumulated contributions. 

Surrender Value is the amount of the reserve accumulation which is used as the 
single premium for the purchase either of paid-up insurance or extended insurance, 
or for a loan, or given altogether for the surrender of the certificate in settlement of 
the contract. The amount deducted from the reserve is called surrender charge, and 
this surrender charge is determined by various methods. In some offices a flat amount 
as $10 per thousand is deducted from the reserve. In other cases, there is a percen- 
tage of the reserve taken as a surrender value; thus 10 per cent is deducted for the 
surrender charge and 90 per cent used as the single premium for the purchase of the 
surrender value. If the reserve were $100, and 90 per cent used as a surrender value, 
then $90 could be used either as a payment in cash, or as a loan, less one annual pre- 
mium, or for the purchase of paid-up insurance, or for the purchase of extended 
insurance. Let it be noticed that a "surrender value" includes a cash surrender value, 



238 

a loan surrender value, a paid-up insurance surrender value, or an extended insurance 
surrender value. 

Loans. Until Elizur Wright secured the enactment of non-forfeiture laws in Mas- 
sachusetts, the life companies (with one or two exceptions) allowed no surrender 
values — not even paid-up or extended insurance. From giving nothing the companies 
went to the extreme of paying on demand cash to the amount of the reserve. From 
this extreme there was a reaction to the extent of deducting one annual premium from 
the cash surrender value, and the amount paid was called a "loan." The loans are 
seldom paid off by the policy-holder, and consequently the real object of life insur- 
ance is largely defeated through the reduction in benefits by the lien against the policy. 

A recent compilation by the Association of Life Insurance Presidents shows that 
of reserves amounting to about three and one-half billions of dollars, $590,000,000 had 
been loaned to policy-holders, or about 16 per cent. The amount of the policies is 
reduced by the total of the loans and the insurance for the protection of beneficiaries 
is five hundred and ninety millions less than the face value of the policies. 

In answer to this last statement it may be asserted truly that were it not for the 
loan privilege on insurance policies, the policy-holders would be forced often to borrow 
at a great sacrifice, and certainly at a less favorable rate of interest than granted by 
the life companies, and in the end the debt would exist, and many times with the life 
insurance policy as collateral and subject to reduction by payment of the debt. 

When the policy-holder obtains a loan on his policy he seldom repays it, and often 
permits it to accumulate at compound interest, rapidly increasing the lien and finally 
rendering the promised benefit very disappointing to those dependent upon it for relief 
or support. A loan obtained from any other scource is not permitted to run indefi- 
nitely, and at least the interest must be paid periodically, so that should the debt be 
not discharged it will not be increased by compound interest additions. Where the 
company requires payment of interest with the payment of each premium the interest 
of the beneficiary is better protected. 

However, if we are to accept the theory that the reserve is held by the company 
as an advance accumulation from the insured to be used in part payment of the 
promised benefit, then the beneficiary receives from the company only the difference 
between the sum insured and the reserve accumulation. 

Therefore, when the beneficiary is paid the face value of the policy, that part 
representing the amount of the reserve accumulation is a return of money belonging 
to the insured and simply held by the company in trust. 

If the insured, previous to death, believed he could make immediate use of this 
trust fund for the advantage of his family, and which would be better for his beneficia- 
ries than to delay its payment until he died, why should he be denied the privilege 
of withdrawing the reserve and leave as protection the amount assumed as the insur- 
ance risk? 

It seems to me that the Life Insurance Presidents are in no position to throw 
obstacles in the way of policy loans, while they assert that the reserve is an individual 
credit. The president of a savings bank would be as much justified in preventing a 
depositor from withdrawing his deposit on the ground that his family would be more 
benefited by leaving it to accumulate until his death. 

To hold that the reserve is an individual credit produces such inconsistency be- 
tween theory and practice as to warrant my criticism of the theory. 

In readjustments by fraternal beneficiary societies, loans or liens have been entered 
against certificates, at the option of members, either to the amount of the value of 
the difference between the rates of contribution at attained and entry ages, or the 



239 

amount of one-half (or other portion) of the monthly contribution rate fixed by the 
readjustment. In some cases the lien is increased by compound interest ; in others 
by simple interest ; in others no interest is charged, according to whether or not the 
advice of an actuary or the suggestion of a delegate has been accepted. 

Members have elected to reduce the insurance protection by the amount of the liens, 
and then the management has had much trouble with beneficiaries who expected the 
face value of certificates. 

In my opinion the lamented President Greene, of the Connecticut Mutual, was 
right in refusing to pay cash or make loans on policies, and confined surrender values 
to paid-up and extended insurance. He also correctly contended that the funds of a 
life insurance company or society were held for the purpose of paying the benefits 
promised for the protection of dependants — that the funds were held in common for 
the advantage of all the insured persons according to their contributions toward such 
funds. 

Theoretically there is no objection to making a loan to the policy-holder from the 
reserve within the net value of the policy. 

Practically there is often protection to the insurance by granting loans for the 
purpose of paying premiums, especially when the insured is unable to meet them 
through loss of wage or salary because of disability or otherwise. I have recommended 
loans to the amount of monthly or annual contributions when there was accumulation 
from excess of past contributions. This has been done because the loan was a protec- 
tion to the insurance protection. Nevertheless, it is somewhat inconsistent for the 
reason that it recognizes an individual interest in the reserve accumulation; and the 
practice, from a legal standpoint, would establish the right to individual credit and 
segregation. The possible saving of the protection for dependants is the excuse for it. 

Non -Forfeitable means that a policy or certificate will not be forfeited or cancelled 
after two, three or four years, as the provisions may be, but that a surrender value 
is given in the way of paid-up insurance or extended insurance, even though the mem- 
ber make no application for such a surrender value. 

Incontestable means that a policy or certificate is incontestable when, by provisions 
and conditions of the contract, payments of the benefits cannot be excluded by the 
company or society for any cause, except the non-payment of premiums or contribu- 
tions. 

Lapse in life insurance means the termination of a contract and forfeiture of the 
value; that is of the accumulation thereunder, by failure to make contribution within 
the time agreed. Lapse does not include all terminations by voluntary withdrawal, 
before the end of the period of protection ; for example — if the conditions of the con- 
tract are such that it has a withdrawal value (that is, a surrender value) and the 
member chooses to withdraw, or if the contract is non-forfeitable and the insurance 
company or society must by the terms of the contract give a surrender value, then it 
is not correct to say that the member lapsed, but that the certificate was terminated 
by "surrender." Hence, a lapsed contract is one where the insurant discontinues con- 
tributions and receives no surrender value but forfeits all reserve accumulation. 

Expiry is the termination of an insurance contract under the conditions and pro- 
visions of the insurance; that is to say, if the member has a term contract for 20 
years, at the end of that period, the contract expires, therefore, its termination is by 
"expiry." 

Maturity is also the termination of a contract under its conditions and provisions ; 
as, a contract promising a death benefit is said to mature when it becomes a claim by 



240 

death, or an endowment contract is said to mature at the end of the endowment 
period when the benefit is payable, whether payable in one sum or by instalments. 

Valuation. Since the first paper concerning valuation was read at Detroit, before 
the National Fraternal Congress, there has been much discussion of the question. 

Some have construed the advocacy of valuation into a contention for such State 
supervision as would turn fraternal orders into "old line" companies. 

When the question is properly understood this fear will be found to be almost 
entirely groundless. 

A valuation is primarily a stock-taking, and its object is to give information as to 
the condition of the business. Only incidentally may it be regarded as a test of 
solvency. 

In he business of life insurance the assets are of two characters — property and cash 
in actual possession, and promised receipts. The liabilities are promises to pay definite 
amounts upon the occurrence of certain events, or at the expiration of certain terms 
of years. 

Valuation is the process of comparing the liabilities with the assets in order to find 
out whether they balance or whether there is an excess on one side or the other. As 
the future payments are due at various dates, the balancing process must be brought 
to some definite date, and the time at which the valuation is begun is usually chosen 
as the most desirable date. 

Of course, if the valuation discloses the fact that the present value of the benefits 
promised is in excess of the present value of the contributions promised, the balance 
can be restored by the assets on hand in the form of cash, or other property with a 
cash value. 

The balance can also be restored in Jwo other ways ; fiirst, by increasing the value 
of the promised contributions, or by decreasing the value of the promised benefits. 

Only in case the latter two remedies are inadmissible can valuation be regarded as 
a test of solvency. 

That it is so regarded today in the case of "old line" companies is due to the fact 
that these companies are limited in the manner just described. On the side of ben- 
efits they have contracted to pay definite amounts, which they cannot diminish. On 
the side of contributions they have agreed to accept in full definite payments at definite 
periods, and these they cannot increase, either in size or frequency. 

It is, consequently, essential that these companies should be able to show upon 
valuation that they have on hand the difference between the present value of benefits 
promised and the present value of contributions promised. 

This difference is known as the net or legal reserve, when the net premium only 
is used in estimating the present value of promised contributions. 

The fact that this difference, or reserve, has come to be used as a test of solvency 
for insurance companies has caused its importance to be unduly magnified, until the 
original object of valuations threatens to be lost sight of. 

What the original object was understood to be in this country is indicated by the 
Massachusetts statute of 1852, quoted by President John A. McCall in his address 
before the State insurance officials, at Columbus, Ohio, September, 1902. The form 
prescribed by this act required two items to be stated, viz. : "Present value of existing 
policies," and "present value to the company of future premiums on these policies." 

Not a word is here said about the reserve, as it was not then used as a test of 
solvency. 

Similarly, in Great Britain the same method of valuation is used when Friendly 
Societies are in question. 



241 

The reason is not difficult to find. 

Friendly Societies, on the other side, and fraternal orders on this side of the 
Atlantic are not confined within the rigid limits of "old line" companies, but enjoy a 
much more flexible premium system. 

So far as benefits are concerned they are usually as little able as "old line" com- 
panies to diminish them, but their ability to increase assessments, either in number or 
frequency, is practically unlimited. 

It is not necessary, therefore, for these societies to have on hand the entire differ- 
ence between the promised benefits and promised contributions at existing rates. 

A valuation of one of these societies is not a test of solvency, but rather an ex- 
ploration. 

Just as the navigator in coastal waters heaves the lead in order to determine 
whether or not there is any danger of a vessel's going aground, so the fraternalist 
institutes valuation of his society to see whether it needs to change its course in order 
to avoid the shoals. 

If he finds as a result of such valuation that the assets in hand are insufficient to 
balance the difference between the present values of promised benefits and promised 
contributions, he then knows that it will be necessary to increase the latter, either in 
size or frequency, and can readily estimate the amount of increase required. 

We find an excellent illustration of this method in a little pamphlet entitled, "Valua- 
tions of Fraternal Associations," by Frederick Gaston, President of the Grand Fra- 
ternity, in which he gives the items concerning a suppositious society. The present 
worth of future liabilities in this case is $1,061,648.76. The present worth 
of the future payments, on the other hand, is $1,017,033.01, the difference being 
$44,615.75. Now, if this society had in hand $40,000, being $4,615.75 less than the 
required reserve, it would be insolvent by the legal reserve test, and yet by adding 
$4,000 to the present value of the future payments, this technical insolvency could be 
immediately abolished. But $4,000 is to $1,000,000 as 1 is to 250. Therefore, an addi- 
tion to the rates of one-two-hundred-and-fiftieth part would restore the balance be- 
tween the value of future benefits and future contributions. 

From this example it must be so evident that he who runs may read that it 
would be the height of absurdity to apply the legal reserve test of solvency to a fra- 
ternal order. 

And yet it is just as evident that valuation is as important to a fraternal order as 
to an "old line" company. 

The operation can be applied to any society, no matter what its plan. 

The ordinary fraternal order endeavors, as a rule, not to exceed twelve assessments 
annually. Twelve, in fact, may be called the normal number, and twelve times the 
assessment rate may be considered as the normal annual payment. 

If, then, in any such society, we place on one side the present value of all the 
insurance promised, and on the other side the present value of twelve assessments 
annually, we will obtain a difference which represents the amount that ought to be on 
hand to make the contract good if the present rates are to continue. 

Or, we can determine from this same lack of balance what increase in the rates is 
necessary in order that their present value shall equal that of the benefits. 

It has been repeated many times that at the inception of the contract the present 
value of the benefit secured under the same is from the very nature of the case exactly 
equal to the present value of the contributions expected to be received. 

I have further explained that in the course of operation the present value of the 
benefit increases because of the nearer approach to maturity of the contract. 



242 

In other words, the benefit side of the insurance contract has an increasing value 
with the lapse of time and the duration of membership. 

On the other hand, the payment side of the insurance contract has a decreasing 
value because the number of premiums, or annual or monthly contributions, still 
remaining to be paid diminishes with every payment, and, of course, the present value 
of the future contributions decreases with the continuance of the insurance contract 
and the lapse of time and duration of membership. 

Obviously, with an increasing present .value of the benefit and a decreasing present 
value of future contributions in the course of operation the present value of the ben- 
efits becomes greater than the present value of future expected contributions. 

Under the explanation of the reserve I have stated that the net value of the insur- 
ance contract is represented by this reserve, and that the reserve represents the differ- 
ence between the present value of the benefits and the present value of the future con- 
tributions at any given date after the issuance of the contract. 

At the moment the contract is entered into the present value of the promised 
benefit is just equal to the preesnt value of the future contributions. 

Immediately after the first contribution is made, then there is a difference between 
the present value of the promised benefit and the present value of future contributions. 
The former increasing and the latter diminishing with the duration of the contract, 
there develops a net -value to the insurance contract equal to the difference between 
the present value of the promised benefits and the present value of the remaining 
contributions to be received. 

At ths moment the insurance contract is made the company or society depends 
entirely upon the future contributions in order to provide for the benefits promised. 

Immediately after the first contribution is made then the society depends upon the 
remaining contributions, together with the reserve accumulation, to provide for the 
benefits promised. 

In other words, the reserve accumulation supplements the future contributions to 
enable the society or company to carry out its contract to pay benefit. 

The valuation of promised benefits and future contributions is a forecast of the 
future on assumptions that future mortality will correspond with or be not higher 
than represented by the Mortality Table employed in the valuation, and that future 
interest earnings on investments will correspond with or be not lower than the interest 
rate assumed. 

This kind of valuation is known as a "Prospective Valuation" — undertaking as it 
does to set forth future prospects. 

In my opinion a Prospective Valuation is much more suitable for life insurance 
companies than for fraternal beneficiary societies, considering the present situation 
of the two kinds of organizations. At least, this character of valuation is not suitable 
for many societies and for a portion of the business of many others. 

The contribution rates for the entire business of many societies are inadequate to 
provide for the promised benefits, when the latter are construed to fix the character 
of the contract. The same is true of large portions of the business of many other 
societies. 

For example, in the certificate it is promised that a designated sum will be paid on 
proof of death of the member. In another certificate it is promised that a designated 
sum will be paid on the death of the member prior to age 70, or the principal sum 
will be paid in ten equal annual instalments, the first payment beginning at age 70. 

The Benefit Side of the first certificate undoubtedly conforms to a whole life 
contract for death benefit payable whenever that event occur, and the present value of 
such a benefit is represented by 



243 

A x = Single Premium, which would be employed in the Prospective Valuation. 

The Benefit Side of the second certificate undoubtedly conforms in promises to a 
contract for an instalment endowment at age 70, or prior death benefit, and is repre- 
sented by 

AEx:7o— x| = Single Premium, which would be employed in the Prospective Valuation 
of such a benefit. 

When the future expected contributions, "as in practice acutally collected," are 
valuated by corresponding Single Premiums for whole life and temporary annuities, 
the resulting values, for very many societies, range from 30 per cent to 85 per cent of 
the values obtained for the promised benefits ; while the accumulated funds will range 
from nothing to 10 per cent or 15 per cent of the value of promised benefits. 

It is the exception when the present value of future expected contributions ("as 
in practice actually collected") plus the accumulated funds will equal the present value 
of promised benefits. 

Consequently, under a Prospective Valuation the degree of solvency is shown as 
low as 30 per cent and seldom 100 per cent. 

Complaint is immediately made of the injustice in such an exhibit, because by such 
the construction of the Payment Side of the contract it is not completely valued when 
assuming that the future contributions are represented by those "as in practice ac- 
tually collected" at the date of valuation. 

It is shown that the society has the reserved right to levy extra assessments, and 
that the legality of the exercise of this right has been sustained by court decisions 
whenever made an issue. 

It is claimed that a present value should be given to the future contributions which 
may be collected under this reserved right. 

It is argued that the right to levy extra assessments is not restricted, nor the num- 
ber limited, and, therefore, the value of future extra assessments should equal the 
difference between the value of the promised benefits and the accumulated funds 
(if any) plus the present value of the future contributions on the basis of those "as 
in practice actually collected" at date of valuation. 

This argument is supplemented by the statement that the members declare and 
assert their willingness to pay extra assessments when needed. This statement is 
supported by reference to the fact that members resist an increase in rates of con- 
tribution on the ground that their contracts were made upon a level rate basis, with 
a provision for the call of extra assessments when needed, and that they want to 
abide by the letter of their contracts. 

It would be subversive of the fundamental principles of prospective valuation to 
assign a present money value to deferred contributions which might be collected 
under a latent right to demand future assessments. 

If there were any present assurance that future extra payments would be made 
when demanded, their present value might be considered. 

Ample experience can be produced to show that reliance cannot be placed in the 
payments of extra assessments as a substitute for increased assessments. The levy of 
extra assessments to supplement regular assessments has put many societies out of 
business, because of lack of response to the call. 

The only practical use of the reserved right to levy extra assessments is to raise 
a fund to make good some impairment in the reserve, or to meet some emergency 
not contemplated in the computation of contribution rates that would be adequate 
under normal conditions. As hereinbefore explained the value of the reserved right 
to levy extra assessments cannot be greater than a required extra surplus or "buffer" 
fund under a "fixed" premium system of insurance. 



244 

Notwithstanding it is impractical, if not impossible, to assign a present money 
value of any degree to the reserved right to levy future extra assessments, neverthe- 
less there is matter for serious consideration in the presentation concerning the unques- 
tioned attitude of members in respect of increase in rates of assessment, and in regard 
to their declarations about a willingness to pay extra assessments "when needed." 

A valuation exhibit that shows 30 per cent of solvency is an absurdity. One that 
shows 70 per cent of solvency discloses an impossible condition in so far as ultimate 
solvency is to be attained without increased rates or decreased benefits. 

The publication of such exhibits brings valuation into disrepute and ridicule 
amongst the members of the societies. 

They sneer at the idea of a society being one hundred and fifty millions of dollars 
deficient when it has fifteen millions in actual accumulated funds — or that there is a 
deficiency of $20,000,000 when the society is possessed of $2,000,000 invested in good 
securities. 

There is so much ignorance in regard to the liability assumed in the promise to 
pay benefits at the death of members, that no general conception can be formed of 
the present money value of such promises. Logically, there can be no concrete idea 
of the present value of future contributions to meet future obligations. 

The outcome is that only ridicule or indifference follows the presentation of an 
exhibit which shows a difference of millions of dollars between the present value of 
expected future claims and the present value of expected future contributions. 

Absolutely nothing is accomplished by such a 'prospective valuation in way of 
educating the members or causing them to realize the technically insolvent position 
of their organization. 

However much the officials may appreciate the valuation results, they are unable 
to stir the membership to reformative action by publication of the exhibit of deficiency. 

It is of public knowledge that! many unsuccessful efforts have been made to secure 
reforms and readjustments by the broadcast publication of valuation deficiencies. 

It appears equally barren of practical accomplishment to make known valuation 
deficiencies under the sanction of law. 

The aim should be to obtain practical results from valuation publicity. 

Little appears to be accomplished by the publication of results from Prospective 
Valuations where large deficiencies are exhibited. 

After years of study I have reached the conclusion that the best method is to 
make a Retrospective Valuation of certificates with rates not adequate for the benefits 
promised when construed from the Benefit Side of the contracts. 

And there should follow the valuation exhibit requests for extra contributions 
from those who were shown to be creating deficiencies. 

This method would test immediately the sincerity of the declared willingness to 
pay extra assessments when needed. 

The Retrospective Valuation would clearly indicate the need of extra contributions 
and from whom they should be required. 

Even though extra assessments were not levied until all accumulation was ex- 
hausted, nevertheless the retrospective valuation would disclose actual instead of 
expected conditions, and the members could see for themselves who were and who 
were not paying their share of the maturing claims, and could see who were creating 
deficiencies and thereby consuming the accumulated funds. 

As an object lesson and for educational purposes nothing could be better than an 
exhibit of the results of a Retrospective Valuation. 

It is a valuation which gives the results of past operation up to the date of valua- 
tioa 



245 

It shows to the members the accumulated value of all the past benefits which have 
been paid and the accumulated value of all past contributions, and whether or not the 
member's past contributions have been more or less than his share in the payment of 
claims — it shows whether or not he has paid more or less than the equitable cost for 
the protection granted to him. 

Reserve Values which are ordinarily published are the terminal reserves, and, as 
stated, these would be useful .for making a valuation by policy years ; that is, by taking 
the value at the end of the policy years. In practice, however, the valuations are 
made by the calendar years, and the modified terminal reserves are known as "mean" 
or "midyear" reserves. 

When premiums or contributions are paid annually in advance the "mean" or 
"midyear" reserves ordinarily are obtained from the terminal reserves by taking- one- 
half of the sum of the annual premiums and terminal reserves of the preceding and 
current years of valuation. 

Thus for age 35 on a whole life policy or contract the premium is $16.62 and the 
reserve at the end of the first year is $11.20; adding these together and dividing by 
two we have the mean reserve in the first year of $13.91. 

The initial reserve for the second year is $16.62 plus the reserve of $11.20 at the 
end of the first year, or $27.82. 

The initial reserve of $27.82 at the beginning of the second year plus the reserve 
at the end of the second year equals $50.58, which divided by 2 gives $25.29 as the 
mean reserve for the second year. 

When the contribution is made annually in advance the mean or midyear reserve 
is greater than the terminal reserve. For example, the terminal reserve at the end 
of the first year is $11.20, while the mean reserve is $13.91. The terminal reserve at 
the end of the second year is $22.76, while the mean reserve is $25.29. This is due 
to the fact that the premium is paid in the beginning of the year, and is supposed to be 
diminished by the payment of claims during the year, so that at the end of the year 
a larger amount of the premiums and reserves would be used for the payment of 
claims. 

The premium of $16.62 in the beginning of the first year is called the initial reserve. 
Likewise the $50.58 is the initial reserve at the beginning of the second year. 

It is seen that the amount of the annual premiums plus the reserve at the end of 
the year is the initial reserve at the beginning of the following year. Therefore, we 
have the initial reserve, the mean reserve and the terminal reserve. 

The terminal reserve is used in the valuation by policy years and is also used in 
the determination of the single premium for the purchase of paid-up insurance, ex- 
tended insurance, loans or cash surrender value. 

If premiums are paid monthly in advance on the first day of the month, the mean 
reserve would be found by taking one-half of the sum of the monthly contributions 
and terminal reserve of the preceding and current month, if we followed the method 
of obtaining the mean reserves when the premium is payable annually in advance. 

However, in practice the premiums are due and payable on a fixed day in each 
month, and the better approximation of the mean reserve is obtained by taking one- 
half of the sum of the terminal reserves for the preceding and current years of valua- 
tion. In the words of the text-book : 

"The value of the policy is the sum which the insurance society or company must 
have in hand to provide for that portion of the liabilities under the contract, which 
future premiums will not cover, and the only source from which it can be derived is 



246 

the accumulation of the balance of past premiums, not absorbed by the risks already 
incurred." 

The valuation is the determination of the amount of the reserve accumulation 
required to supplement future contributions in order to enable the society or com- 
pany to fulfill its promise 

The valuations may he made by employing the net reserve values; that is to say, 
the reserve values on the basis of $1,000 may be worked out in advance, and be used 
for the valuation of any amount of protection by employing the reserve values for 
the age of entry and the duration as the multiplier for the amount of protection 
for the same age of entry and year of duration. 

For example, the reserve accumulation at the end of the fifth year on a whole life 
certificate, the National Fraternal Congress Table of Mortality and 4 per cent interest 
011 $1,000 is $59.62. Now, if at the end of the fifth year, we had $100,000 of protection 
on members at age 35, we would multiply the $100,000 by the $59.62 (or rather we 
would multiply the $59.62 by 100, because the $59.62 is the amount of reserve at the 
end of the fifth year for entry age 35 on $i,ooo of whole life certificate). Conse- 
quently on $100,000 we would have 100 times $59.62, which would give us a reserve 
of $5,962. 

However, the $59.62 is the terminal reserve; that is to say it is the amount accu- 
mulated at the end of the fifth policy year. If the valuation were made by the use of 
terminal reserve values, then the certificate or policy must be valued at the end of the 
certificate or policy year. This date might be in any month or any day of any month 
in the year. Contracts are issued throughout the month of each year, and conse- 
quently, in making a terminal reserve valuation the date of issue must be known in 
order to have the valuation to end on the anniversary of the issuance of the contract. 

Such a valuation would be impractical, and therefore, the law permits and the 
practice is to make valuations as if contracts were issued at the middle of the year, 
because, on the average, policies or certificates have been issued all through the year 
and therefore have an average duration of six months. 

At the end of the year — that is to say, on December 31 of any year — it is assumed 
that all of the policies or certificates outstanding at that date and issued during the 
current year have a duration of six months; and all policies issued in the previous 
year have a duration of one year and six months; and simliarly for other years of 
issue. Therefore, to make a valuation on the basis of duration of one-half a year, 
one year and a half, two years and a half, etc., the terminal reserve values must be 
modified, as before indicated, by conversion into "mean" or "midyear" reserves. 

If the valuation is made by single premiums and annuities these must be modified 
to give "mean" or "midyear" values. 

Likewise if the valuation be on the ''accumulation basis" there must be a modifica- 
tion of the accumulation factors to produce results, as of one half a year, one year 
and a half, etc. 

SURPLUS is the excess of assets over liabilities. 

ASSETS of a life insurance company consist of the available securities and other 
property and the present value of expected future contributions. The available prop- 
erty makes up the actual assets of the company or society. The expected future con- 
tributions receivable make up the prosper/ ive assets of the company or the society. 
The prospective assets are of the nature of hills receivable, being composed of the 
promised contributions expected to be received from the members. Only within the 
last two years have fraternal societies been compelled to report prospective assets; 



247 

that is, the present value of the future contributions expected to be received. Here- 
tofore, they were only required to report the available or actual assets. 

Liabilities of a life insurance company or society are the matured debts and claims 
of every character and the present value of the promised benefits. Assumed and 
matured debts and claims are called the actual liabilities, while the present value of 
the promised benefits are known as the prospective liabilities. The latter are of the 
nature of bills payable. The actual liabilities consist of claims reported, approved and 
unpaid, or existing, or in course of approval, and also the amount that is due to 
different parties whether for expenses or otherwise, and the net value of the outstand- 
ing certificates. This net value is known and heretofore explained as the reserve 
accumulation, or the required accumulation to maintain the integrity of the insurance 
contract. If the total actual and prospective assets are in excess of the actual net 
claims and reserve liabilities, the balance is called surplus, which is available for 
apportionment or distribution or appropriation, as may be determined by the manage- 
ment of the life insurance company or by the rules of the fraternal beneficiary society. 

Dividends are the amounts distributed to policy-holders from the surplus or the 
amount paid to stockholders of stock companies from the surplus. Dividends to policy- 
holders of life companies are not always paid in cash, but are sometimes paid in the 
way of extended or paid-up insurance; usually in the way of paid-up insurance, and 
which latter, being purchased with the dividends, is added to the face of the policy, 
and has been called Reversionary Addition. Dividends to policy-holders are only paid 
upon participating policies or contracts. The contracts upon which no dividends are 
paid are called non-participating policies. 

Stock Companies are those which are controlled by stockholders who own the 
capital stock and in which policy-holders have no voice or vote. 

Mixed Companies are those which have stockholders who jointly act with policy- 
holders to control the management of the companies. 

Mutual Companies are those which are controlled by the policy-holders; at least, 
they have no stockholders and the policy-holders theoretically control the management. 

Renewal Premiums are the premiums or contributions made after the first 
payment. 

Present Value is the amount which a sum due at a future date would be worth 
now, at an agreed rate of interest. 

Actual Mortality is the death rate actually experienced by a company or society. 

Expected Mortality is the death rate according to some standard table of mor- 
tality. 

Adverse Selection usually occurs in connection with unfavorable mortality, but 
generally it is the exercise of privileges and options by the members which are to the 
disadvantage of the society or company. In readjustments of contribution rates there 
are always large withdrawals, and when the withdrawals are of good lives, and the 
impaired lives remain, this is called adverse selection, since the company or society 
can not prevent the withdrawals of good lives nor the retention of the impaired lives. 
Adverse selection also results when members are taken on low rates of contribution 
to be increased or renewed at the end of a term or designated age at a higher rate. 
Many members on attaining to the age or to the end of the period for the low rate 
of contribution will not pay the higher rate and continue the protection, but will lapse. 
Usually these are good lives, while all impaired lives will continue the protection at 
the higher rate ; therefore, there is an adverse selection against the society or com- 
pany. 



248 

Group Insurance is thus described by Mr. Henry Moir : 

"In 191 1 bills were introduced in several State legislatures to authorize companies 
to accept groups of men for life insurance without medical examination, and to make 
it clear that this would not constitute an unjust discrimination. Such laws passed in 
one or two States and failed of passage in others. They facilitate and give legal 
sanction to plans for the, assurance of working men by manufacturers and others who 
employ many men. When the plan is compulsory on the workmen, it is generally best 
that the employer should pay the premium or give what is nearly its equivalent, 
namely, an increased salary enough to meet the premium with the stipulation that the 
premium be deducted from the wages. When the plan is not compulsory on all, a 
medical examination is essential for the due protection of the company. New employes 
are usually subject to examination in any case. As an encouragement to thrift and 
an inducement to a contented spirit amongst workmen the plan is to be warmly com- 
mended. To make it completely satisfying it should be accompanied or supplemented 
by a pension fund providing for the old age of those workmen who survive. Several 
large groups have been accepted on yearly renewable term plans, thus furnishing pro- 
tection without accumulating large reserve funds. Since the average age of a group 
of workmen remains approximately the same from year to year, the older men who 
die or drop out being replaced by young men, the total premiums to be paid by the 
employer would remain about the same. But if a business should begin to fall off, 
the average age of the men will tend to increase, meaning an increase of the pre- 
miums just at the time when the business is least able to meet this expense. Some 
firms and corporations prefer a plan of endowment insurance, maturing at an advanced 
age, as 60 or 65, and there is much to commend this form of policy for the purposes 
in view." 

The group insurance plan of the life insurance companies has been opposed by 
the fraternal beneficiary societies, and at the meetings of the Associated Fraternities 
and the National Fraternal Congress in 1912, when the organizations were consol- 
idated, there were resolutions passed condemning this kind of insurance, and the legis- 
lative committee of the Consolidated Congress was authorized to take such action 
as would prevent legislation favoring group insurance which might be to the disad- 
vantage of the fraternal beneficiary societies. The opposition of the fraternal socie- 
ties was aroused by the fact that one company, at least, undertook to insure as a 
group the lodges of a society in the State of Michigan. By this action a prejudice 
was raised against group insurance, and it was largely due to this opposition that the 
life insurance companies failed to secure favorable legislation in the States, with the 
exception of two or three, or possibly four, up to the date of this writing. 

Under proper regulations and restrictions group insurance might be of great ad- 
vantage of the workingman. 

The trouble appears to be that proper supervision and regulation are not possible 
under existing conditions of disagreement. 

Only a few companies (and no societies) are writing "Group" insurance, and these 
have different plans. 

A very large number of the life companies and practically all of the fraternal 
societies oppose or do not care for this method of getting business. 

Not exceeding half a dozen States (to March, 1914) have laws directly providing 
for group insurance, but the business can be done in upwards of thirty States by 
permission of Insurance Commissioners, 

The Executive Committee of the National Fraternal Congress of America has 
adopted an unconditional resolution in opposition to group insurance and instructed 



249 

its Committee on Statutory Legislation to attempt the defeat of any bills which may 
be introduced in any of the States favorable to group insurance. 

The position of unqualified opposition is taken mainly on the ground that to 
permit life companies to write group insurance would be to allow them to invade the 
field heretofore considered the exclusive pasture for fraternals. 

The particular reason for opposition is the character of policies which are being 
written by the life companies, and the danger of "switching" entire lodges from the 
societies. 

The Insurance Commissioners have declared themselves against the latter, and the 
companies proclaim that they have no intention of making any effort to "switch," 
or even solicit the wholesale transfer of local bodies. Nevertheless, the fraternal 
officials are firmly convinced that the opportunity would exist, and they fear to trust 
their "ancient enemy" with such power. 

The question will finally be settled — as all questions of a public character are 
settled — upon the determination of public utility. 

The people will not deny themselves of an advantage, because one corporation 
can and another can not give the service. Neither will the people forego a general 
benefit in order to protect the business of any public service corporation. 

The present situation is not now affected by popular attention. It is a contest 
between corporations which favor and oppose a particular method of securing business. 

What decision the people would render is problematical. 

As heretofore stated, it appears that the public might be benefited by group insur- 
ance, under proper restrictions, regulations and supervision. 

The objectionable feature under present methods is the elimination of the indi- 
vidual 

The employer and the life or casualty company come to an understanding and 
straightway announcement is made to the employes that a condition of their employ- 
ment is that they be insured according to the scheme arranged for them. And that 
if they quit the service of the employer, or should he discharge, their insurance ceases. 

This is a character of "beneficent" interference with individual rights and privileges 
not conducive to that sort of independence for which Americanism stands. 

It is an utter impossibility to formulate one scheme of insurance for a group of 
persons and have the single plan best for each individual of the group. 

It is a denial of unrestrained liberty when the individual is compelled by force of 
circumstances to accept something inferior to what he could obtain if left to his own 
selection. 

There are objections to the present methods of writing group insurance, because 
of the misconception of its real character by those who are insured. 

Again it is objectionable because of the opportunity given to the employer to 
unduly control the employes. 

A case in point : A person has been employed at a wage of $1,000 a year for ten 
years. He has a valuable interest in his insurance. He has an offer (because of his 
skill from ten years' experience) of $1,200 a year. If he accepts the better position 
he loses his interest in the insurance. The present employer has an advantage gained 
from past contributions of his employe (in part at least) which is not to be com- 
mended. 

The position of an employe should not be prejudiced by any scheme of group insur- 
ance, and he should be left free to accept or reject any plan offered. 

If laws are enacted that will permit the writing of group insurance, all insurance 
organizations should be included. There should be no discrimination between com- 
panies and fraternal societies, as under the practice where the business is written by 



250 

permission of commissioners. And always the employe should be left free to accept 
or reject any group insurance scheme without prejudice to his employment, and he 
should be given an election as to the kind of policy for his insurance, and whether or 
not it terminated with his employment 

Annuity is a stated sum of money which is to be paid yearly. 

Annuitant is the one to whom the annuity is payable. 

Life Annuity is one which terminates on the death of the annuitant. 

Perpetual Annuity is one that is to be paid yearly or periodically for an unlim- 
ited number of years. 

Temporary Annuity is one which terminates after a specified number of years. 

Contingent Annuity is one that terminates on the happening of some stated future 
event, as at the death of a designated person, or at the end of a number of years after 
the end of a designated period. The event may be one that must occur, or one that 
may never occur, so that it is possible for a contingent annuity to be perpetual. 

Deferred Annuity is one the yearly payments of which do not commence until 
some future date, or the happening of some future event. 

Joint Annuity is one to be paid so long as both or all of two or more lives con- 
tinue to exist. 

Annuity on the Last Survivor is an annuity to be paid so long as either or any 
one of two or more lives shall" continue to exist. 

Survivorship Annuity is to be paid to a person termed the nominee, provided he 
survives a designated person who is termed the insured. 

Amortization of Bonds. In a number of States the laws provide for a valuation 
of securities by the method known as Amortization. The law of New York State 
reads as follows : 

"All bonds or other evidences of debt held by a life insurance corporation, author- 
ized to do business in this State, shall, if amply secured and if not in default as to 
principle and interest, be valued as follows: If purchased at par, at the par value; if 
purchased above, or below par, on the basis of the purchase price, adjusted so as to 
bring the value to par at maturity, and so as to yield in the meantime the effective 
rate of interest at which the purchase was made, provided that the purchase price 
shall in no case be taken at a higher figure than the actual market value at the time 
of purchase, and provided further that the Superintendent of Insurance shall have 
full discretion in determining the method of calculating values according to the fore- 
going rules, and the values found by him in accordance with such method shall be 
final and binding; provided also that any such corporation shall return such bond or 
other evidences of debt at their market value or their book value, but in no event at 
an aggregate value exceeding the aggregate of the values calculated according to the 
foregoing rule. The Superintendent of Insurance may at any time, in his discretion, 
require any insurance corporation, other than a life insurance corporation, authorized 
to do business in this State, to value its bonds or other evidences of debt in accordance 
with the foregoing rule." 

In commenting upon this law, Mr. Moir said : 

"It should be noted that this method of valuation does not apply to debts which 
are not amply secured, nor to bonds which may be in default as to principle or inter- 
est. It means generally that securities may be valued on the original basis on which 



251 

they were bought, and if a bond were purchased so as to yield 4V2 per cent interest, 
then it may be taken throughout its entire duration as yielding this interest, whether 
the rate of interest should move upwards or downwards. For a life insurance company 
whose obligations extend for 50 or 60 years, the system is to be highly •commended." 

Legal Reserve. Many persons confuse legal reserve with mathematical reserve. 
The error is due to the fact that in almost all of the States life insurance companies 
are required to maintain a reserve accumulation according to some standard mortality 
table. From the fact that this reserve is required by law, it got its name of "Legal 
Reserve," and Life Insurance Companies became known as "Legal Reserve Companies." 
The laws which require reserve accumulation are called valuation laws from the fact 
that the legal reserve, or the reserve accumulation, can be determined only by a 
valuation, and since the laws require that the net value of the certificates or policies, 
should be reported, they are known as net valuation laws. The laws recently enacted 
for the valuation of the certificates of fraternal beneficiary societies do not confine the 
\^alue to the net reserve, but the Societies are permitted to report the present value 
of the promised benefits and the present value of the future contributions as in prac- 
tice actually collected. In more recent enactments it is also provided that the Societies 
may value their certificates on what has been designated "accumulation basis." This 
is a retrospective method of valuation, since it accumulates the claims which have 
been paid and accumulates contributions which have been made; the difference between 
the two being the value of the accumulated surplus or deficiencies. In the case of 
fraternal societies which have had inadequate rates of contribution, some of the values 
are negative. This will be explained in more 1 detail in describing valuations. 

Mortality Rates. There is no reason why the mortality rate in a 
fraternity should be either higher or lower than in an "old line" company, 
unless the one takes poorer risks than the other does. — Kansas Workman. 

While the above statement is correct in intention, it is unfortunately put. There 
are other reasons, and one or two of them are of considerable iinportance. 

In the first place, there is no< qualification made as to the age distribution of the 
members, and yet this affects, more than any other one circumstance, perhaps, the 
death rate of an insurance society. This age distribution will not be the same in a 
fraternal order as it is in an "old line" company, even though they have been admitting 
members between the same age limits, for the same length of time, because of the 
different kind of policies issued. The ordinary fraternal order deals principally in 
straight life insurance, and the certificates have little or no cash value at any time. 
The "old line" company, on the contrary, makes a much more prominent feature of 
the investment side of insurance, and its policies have a constantly increasing cash 
value. The result of this difference is that the old members remain in the fraternal 
order, while a large proportion of them withdraw from the "old line" company, so 
that in the course of years the age distribution becomes very different in the two, 
and the fraternal order will consequently show a much higher death rate than the 
"old line" company. 

Another important fact in this connection is that every investigation that has 
been made of mortality experience shows that at similar ages the death rate on 
limited payment policies, whether endowment or whole life, is much lower than on 
ordinary life policies, and that the latter is lower than that on term policies. The 
fraternal order usually issues neither endowment nor limited payment life policies, 
and a great many of its usual certificates are really taken on a temporary basis. 
It is but natural in these circumstances that the fraternal order should have a higher 



252 

death rate than an "old line" company, even when the age distribution in the two 
is the same. 

There are other minor reasons for difference, but the two given are sufficient 
to show that the statement quoted from the Kansas Workman is decidedly mislead- 
ing if unqualified. The reason for offering this criticism is that misinformation on 
this subject is so widespread and so injurious on account of the false conclusions 
to which it leads that no effort should be spared to disseminate the truth. 

Pensions. As a solution of the problem of superannuation in the government 
service the United States Civil Service Commission has recommended the compulsory 
purchase of deferred annuities, payable at age 70, or upon the occurrence of prior 
disability. It is believed by the Commissioners that this system will be more equitable 
than that of pensions, as the element of "pull" enters so largely into the latter. 

While this opinion of the Commissioners is probably correct, the question may 
well be asked, why should government employes be pensioned? They are a peculiarly 
favored set, with short hours and long vacations, and it is difficult to understand 
why the mere fact that they are serving the government should entitle them to 
continued pay after they cease such service unless the employes of private cor- 
porations should be equally favored. A pension is properly payable either for extra- 
ordinary services or for premature disability incurred in the line of duty. Thus sol- 
diers or sailors who have been wounded or otherwise injured as a result of the 
hazardous service that they perform are rightly entitled to be pensioned, but a 
service pension, even for these, is wrong in principle. Similar remarks apply to the 
fire and police force of municipalities. 

That the employes of the government ought to provide for their old age no one 
will deny. The only question is as to whether or not this provision should be com- 
pulsory. It seems to me that in making their recommendation the Commissioners 
have considered immediate effects only, and have overlooked the secondary effects, 
which, as has been so well pointed out by Herbert Spencer, are frequently of far 
more importance. The independence of character of which we boast so much in 
this country is undoubtedly the product of our free institutions, and any steps in the 
direction of paternalism should be taken with the utmost hesitation, and only after 
their necessity has been conclusively demonstrated. We all desire that other people 
should be good, but most intelligent men have come to the conclusion that they cannot 
be made good by law — that it must be entirely by self-development. Similarly, the 
advantages of thrift arc abundantly evident ; but this quality also must be of indi- 
vidual growth. It has comparatively little value when forced by legislation. Fur- 
thermore, a measure such as that proposed by the Civil Service Commissioners would 
tend to retain government servants in their positions in spite of their lack of merit. 

There are numerous minor objections that might be raised to this recommenda- 
tion, but enough has been said to show that it should not be endorsed without care- 
ful examination and consideration of all its possible results. 

Some States and many cities have pension funds, most of them being largely 
maintained and dominated by those who expect to become beneficiaries under the 
system. 

Railroad and other corporations subscribe to pension funds for employes and in 
some instances control the management of the funds and prescribe the relief to be 
granted. 

There are pension funds maintained by cooperative associations of teachers and 
policemen and firemen, etc. 



253 

I have investigated many of these funds and there can be urged against therrt 
the objections to pensioning public servants, or they are subject to the criticism 
of contributions inadequate for the benefits promised, even in respect of the teachers' 
funds. 

Strength of Fraternity. There is an inherent strength in fraternity where there 
exists real fraternity. A Mason will do much and sacrifice much for a brother Mason. 
It is the same with a Woodman, a Workman, a Maccabee, an Arcanumite, a Forester, 
and members of many other real and truly fraternal orders which have that bond 
of brotherly love which really binds. 

The fraternity of such societies is an element of strength which counts for dollars, 
and can be relied upon with the same degree of faith as can the contract promises 
to pay premiums by policy-holders of business life companies. 

There is a disposition to "pooh-pooh" this element of strength when writing about 
the millions of promised benefits assumed by the fraternal beneficiary societies. 

There are eighty-seven fraternal beneficiary societies which can depend upon the 
spirit of fraternity to materially aid them in placing these organizations on a per- 
manent and sound basis. There are others which can depend upon the fraternity of 
their associations to equal so much money, but the amount would be difficult to state 
in dollars and cents. There are some which have given too much attention to the 
business side and too little to the fraternal side and must place no reliance in fra- 
ternity to help them out of difficulties. 

All fraternal orders which preach and practice fraternity have a strength wholly 
unknown to business organizations. 

If officials will only be frank and candid and thoroughly confidential and honest 
with their members, telling them plainly and truthfully of present or prospective 
difficulties, they can be assured of support in any practical remedy to overcome such 
difficulties. 

There will be certain members, for individual and personal reasons, who will make 
a great noise, and often make it appear that the members will turn out and turn 
their backs upon the honest officials, but no instance of such a thing can be recalled. 

Honest officials of the true fraternal orders can depend upon the discrimination 
and justice, as well as the strength, of real fraternity. 

Demagogues and self-seeking persons will endeavor to make the members believe 
that the executive officers are doing a wrong thing in telling the truth and in offering 
a remedy for universally acknowledged errors and defects. 

These kind of people always have a big mouth and a loud voice, and they have 
been going about making quite a noise, but the members will not be fooled. 

Fraternity is a thing to be conjured with, if it be real. The counterfeit won't do. 
The name "Fraternal" is not sufficient. 

Indeed, the greatest strength of fraternity has a breaking point. 

Nearly every one of the eighty-seven, now in mind, is placing a greater and 
greater strain upon its bonds of brotherhood, which is something that must stop, 
otherwise they must be soon placed in the doubtful class. 

Don't strain and abuse fraternity. Encourage and use it for the betterment of 
man and the protection of women and children. 

Adequate Rates. Certainly no one will accuse the author of this book of oppos- 
ing the adoption of adequate rates by fraternal orders. He has been too urgent in 
advocacy of them for his position to be misunderstood. 

However, the mere adoption of a plan of adequate rates of assessment will not 
assure present or future solvency. 



254 

The proceeds from the assessments must be properly applied if the rates of assess- 
ment are to maintain a successful management. 

Rates may be "adequate" in so far as computations are concerned, but if the pro- 
ceeds are dissipated in wasteful operation, careful calculation goes for naught. 

The officials of fraternal orders, in some instances at least, are following the "old 
line" example set for them nearly half a century ago. 

Actuaries computed tables of "adequate rates" for the old line companies, and the 
same were adopted and put into force, and the companies advertised the fact and 
thereby gained the confidence of the public. 

Straightway, officials of many of the life companies diverted funds from the uses 
intended by the actuaries, and, it followed that primarily adequate premiums were 
inadequate to support abuse and extravagance. 

The result was failure. 

This result was hurried, in many cases, by examination and valuation. 

The result of diverting funds by fraternal officials will ultimately be failure. 

That result will be no less disappointing and disastrous because of ignorance in 
the uses of funds by these fraternal officials. 

It will not alter the situation even though the funds are used in "building up" 
the society. 

A good plan and adequate rates will not make a successful life insurance or- 
ganization. 

Wise and economical management will do more with a poor plan and inadequate 
rates than wasteful and extravagant management will do with a perfect plan and 
adequate rates. 

Without regulation, supervision and valuation, there is possible great danger of 
the public being deceived, and may be defrauded, by officials adopting "adequate 
rates" and securing endorsement by actuaries of their sufficiency, and then destroy- 
ing the effect of such endorsement by improper management. 

In calculating or certifying to adequate rates, the actuary or mathematician must 
always assume proper management, and the use of funds according to the assump- 
tions of the computations. 

If there is no restraint or regulation to prevent or correct poor or improper man- 
agement the adequacy of rates and endorsement of an expert cannot keep the - or- 
ganization from failure. 

Competing for Adequacy. No better evidence could be given of the change in 
public sentiment than the pride with which officials of fraternal orders announce a 
revision of assessment rates. 

We predict that the shibboleth of "Cheapness," which was the dependence of 
deputies and organizers for so many years, will soon be relegated to the things which 
have been. 

It is significant that the more recently organized societies have been most active 
in the effort to provide adequate rates. 

They are wise in this, because the longer the operation on wrong lines, the more 
difficult it becomes to get upon a sound basis. 

This truth was recently strikingly demonstrated by actual application of a cer- 
tain schedule of rates to three different -societies ; one of them had just organized 
and the rates could be applied to all of its members ; the second had been operating 
for twenty years, but 85 per cent of its members were within admission ages and 
to whom the rates could be applied ; the third had been operating about twenty 






255 

years, but a very large percentage of members was above the admission ages and 
the rates were inadequate for these at their attained ages. 

The schedule was an exceedingly attractive one for the new society. 

For the second society the schedule was equally attractive for the members within 
admission ages ; but, when the rates were advanced proportionately to attained ages 
of the older members, they became so exorbitant as to arouse protest and antagonism 
from these members. To avoid such a condition, it was necessary to "load" a part 
of this burden upon the younger members, which "loading" necessarily increased 
the rates at the lower ages and made the schedule less attractive. 

While the third society did not have members at more advanced ages, it had a 
larger proportion of its membership at these ages. While the relief, per each $1,000 
of protection, for the old members was the same, age for age, as in the second society, 
the aggregate amount "loaded" onto the younger members made much higher rates 
at the lower ages in the third society, and hence rendered the schedule less attractive 
when applied to that society. 

In the first society the member, at say, 20 years of age was only required to pay 
a rate necessary to cover the cost of his own protection. The same was true, of 
course, for all other members at their respective ages. 

In the second society, the member at age 20 (as well as members at other admis- 
sion ages) would be required to pay a rate to provide for his own protection, and, 
in addition, an extra rate for the purpose of assisting older members. 

In the third society a still higher extra rate must be paid by the younger for the 
benefit of the older members, because of the large number of the latter in proportion 
to the former. 

Represented by its present value in cash, the "load" placed upon the member at 
age 20, by the second society, was $35 per $1,000 of insurance. This meant an extra 
rate of about 60 cents annually. 

The present value of the "load" laid upon the member at age 20, by the third 
society, was $53 per $1,000 of protection, which meant a yearly extra rate of 90 cents. 

Suppose the annual rate, at age 20, without any "loading" for old members was, 
say $9.00, then that would be the rate for the member of age 20 in the first society. 
For a member of the same age in the second society the rate would be $9.60, and in 
the third $9.90. 

The second and third, as compared with the first society, would be at a disadvan- 
tage of 60 and 90 cents, respectively, because they would only offer $1,000 of pro- 
tection for $9.60 and $9.90, which could be had on as safe a plan in the first society 
for $9.00. 

The above demonstrates three things, namely : 

First, a society should start right. 

Second, if the start is wrong, the society should get right as quickly as possible. 

Third, that rates which are adequate when applied to one society may be in- 
adequate when applied to some other society. 

Adequacy, Permanency, Attractiveness. These are the three requisites for a 
practical and successful schedule of assessment rates. 

The rates may be "Adequate" for a temporary society, and they may be very 
"Attractive" because "cheap," which is always possible for temporary protection. But 
such rates might not assure "Permanency." 

Rates may be "Adequate" and may be such as to guarantee "Permanency," and 
yet may not be "Attractive." 



256 

So, also, rates may be "Attractive," but wholly "Inadequate" to provide for 
promised benefits or to assure "Permanency." 

Unless there is obtained a combination of "Adequacy," "Permanency" and "At- 
tractiveness," there can be no successful business operation. 

"Adequacy" of rates may guarantee "Permanency," but if not "Attractive," the 
society adopting them will fail for lack of public patronage. 

There may be "Attractiveness," but if the rates are not "Adequate" and give 
assurance of "Permanency," then the society adopting them will fail because unable 
to fulfill its promises. 

To successfully work the combination of "Adequacy," Permanency" and "Attract- 
iveness" requires the joining together of expert knowledge in the preparation of rates 
and practical knowledge in applying them to existing conditions. 

Necessary Combination. There is no royal road to good and successful man- 
agement of any sort of a life insurance organization. 

There are no simple rules to be laid down for attaining to a perfect system in 
business methods. 

In the words of Josiah Quincy : "Neither a good system nor good men can be 
sufficient alone. They must be combined. An ideal organization can be perverted 
by bad men, and the efforts of good men can be rendered nugatory by defective 
systems." 

There have been failures amongst "old line" companies, not because of defects 
in the system of insurance, but because of mismanagement by incompetent or dis- 
honest men. 

There have been failures amongst fraternal orders, not because the officers and 
managers were incompetent or dishonest, but because of a defective system. 

For successful and permanent operation there must be a combination of good 
men and a perfect system. 

Adequate rates and a scientific plan are of no avail when the business manage- 
ment is controlled by selfish, designing, incompetent, unscrupulous or dishonest men. 

The fact of a scientific plan and adequate rates may become a cloak to hide the 
misdeeds or mistakes of such men. 

The plan and the rates are emblazoned in shining letters to dazzle the eye, to 
the end that ruinous management may not be noticed until too late for remedy. 

On the other hand, the results of adding new members, of economical manage- 
ment, of popular social features, may so attract attention as to cause members, and 
even officials, to neglect to look into the system under which the business is being 
operated. 

Present promises may be made for the future payments of millions and millions 
in benefits, without any consideration whatever of the means for the fulfillment of 
these promises. 

Because thousands of persons can be persuaded to accept certificates as evidences 
of the promises to pay future benefits, and in consideration therefor will make monthly 
contributions of small amounts, these facts appear conclusive as to the efficiency of 
management and the prosperity of the society. 

The relation between the contributions and the promises are utterly ignored. 

In a general way it is realized that the promises can only be fulfilled by having 
contributions adequate for the payment of all claims under these promises. 

But how many members, how many directors and trustees and officials stop to 
question and analyze and investigate the system and plan of operation? How many 
of these can give a plain and satisfactory and correct answer to the question: 



257 

"Will the promised contributions be adequate and sufficient to provide for the 
promised benefits?" 

Permanent life insurance organizations cannot be builded by good men and good 
managers alone. 

There must be a combination of good men and good plans. 

Look to it that your society has both, else ultimate failure will' result. 

Legislation. The importance of thrift, both to the individual and to the com- 
munity, has been so often told in song and story that a rehearsal of the tale would 
be wearisome and profitless. Charity is a beautiful virtue when the necessity for it 
exists, but few intelligent persons will deny that alms-houses and dispensaries are 
blots on our fair landscape, only less hideous than jails and penitentiaries. The 
abolition of poverty may be an "irridescent dream," but surely the eye of hope is 
not forbidden to view a time when every adult male shall be able and wiMing to 
support himself and his natural dependants. Verily, it is a consummation devoutly 
to be wished, and to the accomplishment of no better end can we devote our sur- 
plus energies. 

In this connection precept is not lacking. Advice, proverbial and otherwise, so 
prominently adorns the pages of both permanent and ephemeral literature and is 
thundered from so many platforms and pulpits that he who would escape the all- 
pervading admonitions must seek a rock in the mighty waste or some "boundless 
contiguity of shade," "far from the madding crowd." 

It is the incompetent that need to learn the lesson of thrift, and it is of the utmost 
importance to society that they should be encouraged therein. 

Unable properly to protect themselves, they should receive the more consideration 
at the hands of the law. 

To those that clear their minds of cant and reason from facts instead of formulas, 
the necessity of a certain admixture of paternalism with government is apparent. 

Men with the ability to acquire wealth may safely be left to take care of it in 
their own way. 

Not so the poor, however. Their money is hard earned and still more hard saved, 
and the loss of their little surplus is not only a misfortune to them, but indirectly 
to the whole community, in that it discourages the developing habit of providence. 

For these reasons, if for no others, peculiar safeguards should be applied to the 
business of any financial institution that caters specially to the poor. 

This duty of the government has been recognized in the case of savings banks, 
and, as a result, the loss of deposits made therein is exceedingly rare. 

Of perhaps equal importance with the savings banks are the great fraternal bene- 
ficiary associations, the so-called poor man's insurance societies. 

For some reason not easy to understand, but probably owing to the influence of 
general apathy, the government has grossly neglected its duty toward these orders. 

Perhaps because of their democratic management they have been largely free 
from restraint. 

In most cases failure of the society has caused little or no financial loss to the 
members because collections were made for the purpose of paying current claims 
only, and there was no accumulated fund belonging to the aggregate membership. 

The damage resulting from failures has been largely indirect, but none the less real. 

Many members, a 1 ike ignorant of insurance principles and of the modus operandi 
of their own societies, supposed that they were paying for whole life protection. 

Upon discovery of their error they were not unnaturally disposed to blame every- 
thing else rather than their own lack of information. ' 



258 

Embittered by disappointment, they denounce the whole fraternal system as a 
fraud and often abandon the attempt to protect their families in this way. 

Thus what should be a blessing becomes a curse, in that it discourages rather than 
stimulates the disposition toward thrift. 

Such an attitude on the part of the poorer classes is most unfortunate and de- 
mands the serious consideration of everyone interested in the welfare of humanity. 

If a remedy can be found that will restore and justify the confidence once placed 
in these societies, it cannot be applied too quickly. 

Within recent years reserve funds have -become increasingly prominent in the 
plans of the various orders so that failures will be more disastrous in the future than 
they have been in the past. To) prevent these failures, which are inevitable under 
present loose methods of regulation, is one of the most urgent duties of the times. 

As fraternal beneficiary associations are chartered by the various States, and 
thus receive official endorsement of their plans, the duty of the State to test such 
plans before issuing the charters is clear. 

This duty is rendered more imperative by the fact that the average citizen is 
utterly incapable of doing the work himself. 

Life insurance contracts cover long periods and are based on assumptions as to 
mortality and interest that place them beyond the comprehension of all who are not 
somewhat instructed in the technicalities of the subject. 

The average man buys protection to his family as he buys medical or legal advice, 
largely on faith, lie cannot test the quality of his purchase except by results. 

In the latter two cases these results are more or less immediate; in the former 
they are remote. 

Yet the State properly requires the aspirant for medical or legal practice to demon- 
strate his competency before it allows him to solicit the public. 

Still more rigid should the requirement be in the case of a life insurance or- 
ganization, which expects, on the average, to receive money for many years before 
it makes any direct return. 

The plan of such an institution needs to be adequate not only for the present, but 
for a long time to come. 

Hy failing to subject these plans to proper tests before permitting their operation, 
the State neglects one of its most important duties. 

It is true that old line companies are held to a pretty strict accountability where 
net reserve laws are in force; but the fraternal order, which caters particularly to poor 
nun, to whom the loss of their protection is of the most serious consequence, in re- 
spect of reserves, is practica'ly unrestrained. The recently enacted valuation laws 
for fraternal societies is a step in the right direction — and probably is a sufficiently 
progressive step until 192 1, when their effect can be determined and their defects cured. 
Insurance Methods. "Principles" are often confused with "methods" ir respect 
of rates of assessment for insurance cost. 

There is in reality but one primary principle underlying the business of life insurance. 

There are many ways or methods of applying that principle to practical operation. 

One way, and the first method which was adopted in practice, is to make a level 
rate for all contributing members, regardless of age, occupation, health or residence, 
and levy assessments according to that rate to provide for claims as they occur. 

This method may be modified by confining the insurance to one class, as in Brook- 
lyn, N. V., where there is a society which insures doctors only. 

Or the modification may be in excluding certain hazardous occupations, or persons 
in had physical condition, etc. 



259 

Another method is to grade the rates to ages of entry and have them remain 
level thereafter and increase the number of assessments to provide for increased cost. 

Again the method may he to grade to ages of entry and have the rates remain 
level thereafter, and provide for the future increase in cost by adding to the rales 
an excess charge over actual cost for a number of years so as to produce an accumur 
lation to take care of the heavier cost in later years. This is called -the "Level Pre 
mium" method. 

And then there is a method of grading rates to ages of entry and have them in- 
crease annually or periodically thereafter to cover the increasing cost. This is the 
"Natural Premium" or "Term" method. 

There are other different methods of providing for the payment of the cost of 
insurance protection, and there are many modifications and combinations of all of 
the methods. 

The object of all of them is to pay claims under the agreements and contracts of 
insurance. 

Some one very pertinently wants to know why a man should not exercise the 
, .privilege of selecting either method that suits his fancy. 

Why should Insurance Commissioners, or legislators, undertake to prevent so- 
| cieties or associations from offering protection under any one of these methods? 

There should be no abridgment of the right of the individual to select the method 
I of payment most to his liking. The very fact that he elects to choose between 
methods is evidence of discrimination and judgment, and every man should be left 
to his own judgment in such purely personal matters. 

I't is not so easy to answer the question when it relates to open and unrestricted 
license to societies and associations. 

If they would tell the whole truth about their methods and leave the applicant 
to intelligently select, then unrestrained operation would be advisable. 

However, it is well known that individuals are persuaded to take insurance pro- 
tection. Very few voluntarily seek it. Very few use any judgment in deciding be- 
tween methods. Almost invariably 'they accept what they take on faith and believe 
what is told them as to plans and methods. 

In such circumstances, would it not be well to require organizations to fairly 
represent what they have to offer? 

Would it not be to the advantage of those who voluntarily tell the whole truth 
to have some law to force all to be truthful? 

If one society has the old equal levy plan, and believes it good, why should it 
object to being advertised as operating upon such a method? And so with all others 
' having different methods. 

Why should not each tub stand upon its own bottom? 

Why not have each society state its method in plain terms and then succeed or 
fail upon the merits of it? 

•Why not have insurance principle the foundation stone for practical operation? 

J 

The Natural Premium Plan. The following exhibit is worth study from many 
angles. 



260 

Take columns 2 and 3. Column 2 shows the "natural premiums," the "annually 
increasing costs of insurance." Column 3 shows the sum that an entrant at 20 will 
pay towards claims on account of death amongst his associate insurants, amounting 
to $8,009.80 if he lives to age 98, and, under the pure natural premium plan, he would 
be assessed $1,000 to pay his death claim should he die at that age as expected of him. 

Then note the last item of column 5, showing $7,967.58 as the total of "mortuary 
increment" in comparison with $1,242.22 as the "interest increment" under the net 
level annual premium of $10.34. 

Following is an analysis and demonstration of the workings of the two plans from 
age 20 to the limit of the N. F. C. Table at age 99, under an assumption of 4 per 
cent interest : 

Column gives the number of years from ages 20 to 98, inclusive. 

Column 1 gives the level annual premium at age 20 for insuring $1,000 in the 
event of death. 

Column 2 gives the natural annual premiums, or yearly increasing insurance 
costs of $1,000 payable at death, beginning with $5.00 at age 20, and increasing 
yearly to $1,000 at age 98, for the seventy-ninth and last year of insurance. 

Column 3 gives the summation of the natural premiums (in column 2), and shows 
the total amountj ($9,009.80) that would be paid by a member who eritered at age* 
20 and survived to age 99 (the limit of life as assumed in the Mortality Table). 

Column 4 gives the amounts, with 4 per cent interest, taken each year from the 
level premium and placed in reserve to the end of the twenty-ninth year. Beginning 
with the thirtieth year the insurance cost (see column 2) exceeds the level premium 
(and interest thereon) by 7 cents, which latter amount is drawn from the accumu- 
lated reserve from the member's premiums (shown in column 5). The difference 
between the cost and the level premium in succeeding years is drawn from the 
reserve accumulated by the member until that fund is exhausted in the fifty-fifth 
year. Beginning with the fifty-fifth year the difference between the yearly increasing 
costs and the level premium is drawn from "Mortuary Accretions," being the accumu- 
lated amount of reserve payments (with interest) that have been forfeited by those 
who have died. 

Column 5 gives the summation of the amounts (with interest) which have been 
placed in the reserve from the level premium payments. There are additions from 
the level premiums and interest for twenty-nine years. The additions are 6*nly from 
interest after the twenty-ninth year, since the entire level premium is consumed for 
insurance cost in succeeding years. The costs of insurance increase so rapidly in 
these succeeding years that they also consume the entire individual reserve accumu- 
lation before the end of the fifty-fifth year. Beginning with the latter year, the mem- 
ber's interest in the accumulation from reserve payments forfeited by those who have 
previously died is made available to meet the increasing demands for insurance cost 
(as given in column 2). The summation of the amounts thus drawn from "Mor- 
tuary Accretions," shown in this column (5) from the fifty-fifth to the seventy-ninth 
year, discloses the fact that the member is benefited thereby to the amount of 
$7,967.58. It has required all of his payments with interest (under the level pre- 
mium, see $1,242,22 in column 6), and $7,967.58 forfeited by deceased members, to 
pay the costs of his $1,000 of protection during seventy-nine years. 

Column 6 gives the sum of columns 3 and 5, and shows the total amounts, with 
interest, paid by the member under the level premium plan of contributing the 
yearly and uniform amount of $10.34. Beginning with the fifty-fifth year, the sum of 
columns 3 and 5 is, in reality, a difference, because the amounts in the latter column 
are minus quantities, being derived from the accumulation of others and not from 
the payments by the individual member. The annual increase in column 6, after 
the fifty-fifth year, is, therefore, only the amount of the level premium ($10.34) 
with interest, or $10.75. 



261 



(0) 


(1) 


(2) 


(3) 


(4) 


(5) 


(6) 


1 


10.34 


5.00 


5.00 


5.75 


5.75 


10.75 


2 


10.34 


5.04 


10.04 


5.71 


11.69 


21.73 


3 


10.34 


5.07 


15.11 


5.68 


17.84 


32.95 


4 


10.34 


5.11 


20.22 


5.64 


24.19 


44.41 


5 


10.34 


5.15 


25.37 


5.60 


30.76 


56.13 


6 


10.34 


5.20 


30.57 


5.55 


37.54 


68.11 


7 


10.34 


5.26 


35.83 


5.49 


44.53 


80.36 


8 


10.34 


5.32 


41.15 


5.43 


51.74 


92.89 


9 


10.34 


5.39 


46.54 


5.36 


59.17 


105.71 


10 


10.34 


5.47 


52.01 


5.28 


66.82 


118.83 


11 


10.34 


5.55 


57.56 


5.20 


74.69 


132.25 


12 


10.34 


5.65 


63.21 


5.10 


82.78 


145.99 


13 


10.34 


5.75 


68.96 


5.00 


91.09 


160.05 


14 


10.34 


5.87 


74.83 


4.88 


99.61 


174.44 


15 


10.34 


6.00 


80.83 


4.75 


108.34 


189.17 


16 


10.34 


6.15 


86.98 


4.60 


117.27 


204.25 


17 


10.34 


6.31 


93.29 


4.44 


126.40 


219.69 


18 


10.34 


6.49 


99.78 


4.26 


135.72 


235.50 


19 


10.34 


6.70 


106.48 


4.05 


145.20 


251.68 


20 


10.34 


6.92 


113.40 


3.83 


154.84 


268.24 


21 


10.34 


7.17 


120.57 


3.58 


164.61 


285.18 


22 


10.34 


7.45 


128.02 


3.30 


174.49 


302.51 


23 


10.34 


7.77 


135.79 


2.98 


184.45 


320.24 


24 


10.34 


8.11 


143.90 


2.64 


194.47 


338.37 


25 


10.34 


8.48 


152.38 


2.27 


204.52 


356.90 


26 


10.34 


8.87 


161.25 


1.88 


214.58 


375.83 


27 


10.34 


9.29 


170.54 


1.46 


224.62 


395.16 


28 


10.34 


9.75 


180.29 


1.00 


234.60 


414.89 


29 


10.34 


10.27 


190.56 


.48 


244.46 


435.02 


30 


10.34 


10.82 


201.38 


-.07 


254.17 


455.55 


31 


10.34 


11.44 


212.82 


-.69 


263.65 


476.47 


32 


10.34 


12.15 


224.97 


-1.40 


272.80 


497.77 


33 


10.34 


12.90 


237.87 


-2.15 


281.56 


519.43 


34 


10.34 


13.75 


251.62 


-3.00 


289.82 


541.48 


35 


10.34 


14.68 


266.30 


-3.93 


297.48 


563.78 


36 


10.34 


15.71 


282.01 


-4.96 


304.42 


586.43 


37 


10.34 


16.86 


298.87 


-6.11 


310.49 


609.36 


38 


10.34 


18.12 


316.99 


-7.37 


315.54 


632.53 


39 


10.34 - 


19.50 


336.49 


-8.75 


319.41 


655.90 


40 


10.34 


21.05 


357.54 


-10.30 


321.89 


679.43 


41 


10.34 


22.75 


380.29 


-12.00 


322.77 


703.06 


42 


10.34 


24.64 


404.93 


-13.89 


321.79 


726.72 


43 


10.34 


26.72 


431.65 


-15.97 


318.69 


750.34 


44 


10.34 


29.03 


460.68 


-18.28 


313.16 


773.84 


45 


10.34 


31.57 


492.25 


-20.82 


304.87 


797.12 


46 


10.34 


34.39 


526.64 


-23.64 


293.42 


820.06 


47 


10.34 


37.52 


564.16 


-26.77 


278.39 


842.55 


48 


10.34 


40.96 


605.12 


-30.21 


259.32 


« 864.44 


49 


10.34 


44.77 


649.89 


-34.02 


235.67 


885.56 


50 


10.34 


48.98 


698.87 


-38.23 


206.87 


905.74 



262 



(0) 


(1) 


(2) 


(3) 


(4) 


(5) 


(6) 


51 


10.34 


53.65 


752.52 


-42.90 


172.24 


924.76 


52 


10.34 


58.81 


811.33 


-48.06 


131.07 


942.40 


53 


10.34 


64.49 


875.82 


-53.74 


82.57 


958.39 


54 


10.34 


70.81 


946.63 


-60.06 


25.81 


972.44 


55 


10.34 


77.78 


1024.41 


-67.03 


-40.19 


984.22 


56 


10.34 


85.48 


1109.89 


-74.73 


-114.92 


994.97 


57 


10.34 


93.99 


1203.88 


-83.24 


-198.16 


1005.72 


58 


10.34 


103.40 


1307.28 


-92.65 


-290.81 


1016.47 


59 


10.34 


113.84 


1421.12 


-103.09 


-393.90 


1027.22 


60 


10.34 


125.35 


1546.47 


-114.60 


-508.50 


1037.97 


61 


10.34 


138.09 


1684.45 


-127.34 


-635.84 


1048.72 


62 


10.34 


152.19 


1836.75 


-141.44 


-777.28 


1059.47 


63 


10.34 


167.77 


2004.52 


-157.02 


-934.30 


1070.22 


64 


10.34 


184.96 


2189.48 


-174.21 


-1108.51 


1080.97 


65 


10.34 


204.04 


2393.52 


-193.29 


-1301.80 


1091.72 


66 


10.34 


225.08 


2618.60 


-214.33 


-1516.13 


1102.47 


67 


10.34 


248.35 


2866.95 


-237.60 


-1753.73 


1113.22 


68 


10.34 


274.15 


3141.10 


-263.40 


-2017.13 


1123.97 


69 


10.34 


302.57 


3443.67 . 


-291.82 


-2308.95 


1134.72 


70 


10.34 


334.18 


3777.85 


-323.43 


-2632.38 


1145.47 


71 


10.34 


368.79 


4146.64 


-358.04 


-2990.42 


1156.22 


72 , 


10.34 


407.67 


4554.31 


-396.92 


-3387.34 


1166.97 


73 


10.34 


449.75 


5004.06 


-439.00 


-3826.34 


1177.72 


74 


10.34 


498.45 


5502.51 


-487.70 


-4314.04 


1188.47 


75 


10.34 


549.38 


6051.89 


-538.63 


-4852.67 


1199.22 


76 


10.34 


602.74 


6654.63 


-591.99 


-5444.66 


1209.97 


77 


10.34 


655.17 


7309.80 


-644.42 


-6089.08 


1220.72 


78 


10.34 


700.00 


8009.80 


-689.25 


-6978.33 


1231.47 


79 


10.34 


1000.00 


9009.80 


-989.25 


-7967.58 


1242.22 



If the foregoing table is carefully studied, a clear understanding should be had 
of the difference between the level and natural premiums. And there should also be 
a definite appreciation of the advantages of the two plans. 

It will be seen, from comparing columns 3 and 6, that the member entering at 
20 does not pay out a total sum under the "Natural Premium" equal to the sum 
paid under the "Level Premium" until the end of fifty-four years, or at age 74. To 
the latter age the advantage is with the "Natural Premium" plan. 

If no interest is accounted for on the excess payments under the level premium 
plan, and only the actual payments of $10.34 annually are considered, even then the 
advantage is with the "Natural Premium" plan for forty-three years, as may be 
seen by comparing columns 1 and 3. At the end of forty-three years the total pay- 
ments under the "Level Premium" amount to $444.62, and under the "Natural Pre- 
mium" to $431.65. Thus the advantage of the latter is maintained, under the most 
favorable comparison, to the advanced age of 64, when, ordinarily, there are few, 
if any, dependants. 

This advantage in the method of paying costs by "Natural Premiums," from age 
20 to 64, if improved as any provident man could and should improve it, would be 
represented by a cash accumulation of $318.69 (see column 5) at age 64. 



263 



It is, therefore, clear that the actual amounts paid in assessments, without con- 
sidering interest on excesses, amount to a greater sum under the Level than the 
Natural Premium plan during forty-three years. If the difference in payments is 
utilized, there could be accumualted $318.69, as an old age or other benefit. 

If insurance protection is continued to the advanced ages, when there are few 
or no dependants to protect, then the "Natural Premium" plan is not so attractive. 

It is a plan that follows "Nature'' and conforms to the ordinary conditions in life, 
and meets the demands of common sense in deciding upon a plan for the protection 
of dependants at a time when they most need protection. 

It is not a plan to provide for old age, or to encourage speculation upon the 
lives of old people or to build up estates, or to answer for an investment. It is not 
a plan to be safely or economically operated beyond age 65 or 70 in its pure and 
simple form. It must be combined in some way with reserve accumulation if pro- 
tection is to be continued beyond age 70. 

Deductions from the N. F. C. Table. 

Column 1 gives the number dying during each year, assuming 100,000 persons 
living at age 20. Thus, during the first year, age 20 to 21, 500 die. During the second 
year, age 21 to 22, 501 die, making the total deaths in the two years 1,001. At the 
end of the fiftieth year, age 69 to 70, 50,698 of the original 100,000 have died. Hence, 
half of all the original entrants would be dead between age 69 and 70, or at the 
end of 49.7 years, as shown in column 3 opposite age 20. 

Column 2 gives the years of "Life Expectancy/' The figures in this column, 
whether for the N. F. C. Table or any other mortality experience, are almost uni- 
versally misused when endeavoring to base rate upon "Life Expectancy." 

Column 3 gives the "Equation of Life," which is the number of years that will 
elapse until half of the original entrants at any given age have died. Thus, of 1,000 
persons at age 20, 500 will have died within 49.7 years. Of 1,000, at age 25, one-half 
will have died at the end of 45.2 years. Of 1,000 at age 40, one-half will have died 
at the end of 31.7 years. And so on for each age, as shown in column 3. 

Column 4 gives the number of years that will elapse before an entrant will con- 
tribute on the natural premium system an amount equal to the face of his cer- 
tificate. Thus, a member who enters at age 20 and pays $5.00 the first year and $5.04 
the second year, and so on, increasing each year according to the N. F. C. Mortality 
Table, will require 54.7 years to contribute $1,000. Similarly, a member entertaing 
at age 30 will require 45.3 years. The corresponding figures for other ages will be 
found in this column opposite the respective ages. 



(0) 


(1) 


(2) 


(3) 


(4) 


20 


500 


45.6 


49.7 


54.7 


21 


1,001 


44.9 


48.8 


53.8 


22 


1,503 


44.1 


47.9 


52.8 


23 


2,006 


43.3 


47.0 


51.9 


24 


2,511 


42.5 


46.1 


50.9 


25 


3,018 


41.8 


45.2 


50.0 


26 


3,528 


41.0 


44.3 


49.1 


27 


4,041 


40.2 


43.4 


48.1 


28 


4,558 


39.4 


42.5 


47.2 


29 


5,080 


38.6 


41.6 


46.3 


30 


5,607 


37.8 


40.7 


45.3 


31 


6,140 


37.0 


39.8 


44.4 


32 


6,680 


36.2 


38.9 


43.5 


33 


7,228 


35.4 


38.0 


42.5 


34 


7,785 


34.6 


37.1 


41.6 


35 


8,352 


33.9 


36.2 


40.7 


36 


8,930 


33,1 


35.3 


39.7 


37 


9,521 


32.3 


34.4 


38.8 



264 



(0) 


(1) 


(2) 


(3) 


(4) 


38 


10,127 


31.5 


33.5 


37.9 


39 


10,749 


30.7 


32.6 


36.9 


40 


11,389 


29.9 


31.7 


36.0 


41 


12,049 


29.1 


30.9 


35.1 


42 


12,732 


28.3 


30.0 


34.2 


43 


13,440 


27.5 


29.1 


33.3 


44 


14,174 


26.8 


28.2 


32.4 


45 


14,935 


26.0 


27.4 


31.4 


46 


15,725 


25.2 


26.5 


30.5 


47 


16,547 


24.4 


25.6 


29.6 


48 


17,404 


23.7 


24.8 


28.7 


49 


18,298 


22.9 


23.9 


27.9 


50 


19,233 


22.2 


23.1 


27.0 


51 


20,214 


21.4 


22.2 


26.1 


52 


21,243 


20.7 


21.4 


25.2 


53 


22,326 


19.9 


20.6 


24.3 


54 


23,466 


19.2 


19.8 


23.5 


55 


24,668 


18.5 


19.0 


22.6 


56 


25,938 


17.8 


18.2 


21.8 


57 


27,280 


17.1 


17.4 


20.9 


58 


28,698 


16.4 


16.6 


20.1 


59 


30,199 


15.7 


15.8 


19.3 


60 


31,787 


15.0 


15.1 


18.5 


61 


33,468 


14.4 


14.4 


17.7 


62 


35,246 


13.7 


13.6 


16.9 


63 


37,126 


13.1 


12.9 


16.1 


64 


39,111 


12.4 


12.2 


15.3 


65 


41,205 


11.8 


11.6 


14.6 


66 


43,411 


11.2 


10.9 


13.8 


67 


45,729 


10.7 


10.3 


13.1 


68 


48,159 


10.1 


9.7 


12.4 


69 


50,698 


9.5 


9.1 


11.7 


70 


53,343 


9.0 


8.5 


11.1 



So much has been said about the undesirability and unattractiveness of the 
"Natural Premium" or "Step Rate" plan of insurance that column 4 was especially 
prepared to show that it is a paying proposition for a great many years, even when 
taken at advanced ages. 

No one will deny that the "Natural Premium" plan is the very cheapest possible 
in the event of early death. 

The practical question for decision is (when deciding upon the plan for paying 
assessments), how long will I probably need protection for dependants, and how 
long will I probably live? 

The needs of protection for dependants is an individual matter exclusively and 
must be determined by each member for himself. Assistance in the determination 
cannot be rendered by an appeal to averages. The individual must know his present 
status, estimate the prospects for the future and make his own calculations as to 
the time when present and prospective dependants will relieve him from care for 
their support. 

As to how long he will probably live, an approximate idea can be given to him 
by consulting column 3. According to observed experience, half of a given number 
of persons at his age (say 35) have survived for 36.2 years. Hence, it is assumed 
that he has an equal chance to live for that period. 

If he were to pay the increasing insurance costs as they accrue from year to 
year, according to the "Natural Premiums," it would require that he should live and 
pay for 40.7 years before he would pay out $1,000. 



265 

Should he only live the average life time, 36.2 years, he would pay out as assess- 
ments $671, which would be $229 less than the sum insured, and hence the "Natural 
Premium" plan would yield a "profit" for more than half of all who entered at age 35. 
The "profit," or "benefit," to the heirs of those who died in the first year of insurance, 
and who had paid one annual assessment of $6.15, would be $993.85. To the heirs of 
those who died in the thirty-sixth year of insurance the "profit" would be $229 over 
all payments of assessments. 

Why is it not an attractive proposition that will yield to half of all who enter 
at age 35 "profits" to heir ranging from $993.85 to $229? 

Each member has an equal chance with every other member of benefitting his heirs 
to a greater or less extent, according to the year of his death, but which in any event 
will exceed by at least thirty-three and one-third per cent his total outlay, even 
though he survive to the age of 71. 

If 1,000 members enter into insurance at age 40, half of them will survive for 
31.7 years, while no one of these survivors will pay, by "Natural Premiums," a tota] 
sum equal to $1,000 in less than 36 years. It follows) that the 500 who die before 
attaining to "]2 years of age will pay out much less than $1,000 in assessments. 

Entering at 60, it would require 18.5 years for a member to pay, by "Natural 
Premiums," the sum of $1,000. Half of a given number at 60 would die within 15. 1 
years, and, therefore, half would pay out much less than $1,000 under the "Natural 
Premium" plan, even at that advanced age. 

It is just as well to calmly consider this "Step Rate" plan before condemning it 
by mere inspection of the figures at the very advanced ages. 

Insurance is for the protection of dependants, is it not? How many dependants 
will there be at age 70, anyway? 

How much need will there be for it after the age of three score years and ten? 

Up to that age you have a good proposition, and you have an equal chance with 
your associates for living to 70, since beginning as young as 20 only a fraction more 
than half of all original entrants will have died before reaching that age. 

Under the "Natural Premium" plan there is no bother about reserve accumulation 
and investments and interest earnings. It is a straight, simple insurance proposition, 
where you "pay as you go," and get exactly what you pay for. 

If a man believes that he will be of that number who live beyond the average life 
time, that he will survive beyond the "Equation of Life," then he may look with 
disfavor upon the "Natural Premium" plan, which levies large and progressively 
increasing assessments at the very advanced ages. 

It is strange that anyone should have anxiety about protection for dependants 
beyond the age of 70, since so little need exists for such protection, yet that apparent 
anxiety is the basis for objection to the "Natural Premium" plan. 

If the real purpose were exposed by close analysis of what men really desire at 
these advanced ages, it would be discovered that they want protection for them- 
selves in old age, and they have an idea that an insurance certificate on their own 
lives will serve their purpose. 

It is a mistaken use of life insurance to undertake to turn it to such a purpose, 
and there will result disappointment from such an undertaking. However, if the 
effort is to be made to combine in one contract protection for self in old age as well 
as protection for dependants during the dependancy period, then the "Level Pre- 
mium" plan is superior to the "Natural Premium" plan, by virtue of the accumulation 
to the credit of the former at advanced ages. 

The Level Premium Plan. There are many things to be said in favor of the 
straight "Level Premium" plan, and much more to be said in favor of the "Natural 



266 

Premium" plan, but it is not to be disputed that popular sentiment strongly leans 
towards the former. Much of this sentiment is due to a misconception of insurance 
methods and principles. 

Believing that too much details is impossible in this connection, I submit another 
chart showing the working of the reserve under a level premium. 

fooo. 



Practical Working of the Reserve. 

This chart illustrates the Level Premium at the age of 
35 in five-year periods. The curved line represents the 
increasing cost of insurance according to the N. F. C. 
Table of Mortality, and begins there at $6.00 annually and 
ends at $1,000. 

The horizontal line which represents the Level Premium 
cuts the curved line at a point corresponding to $16.62. 
To the left of the point of crossing the distance between 
the curved and straight lines represents the amount of 
excess payments at any point. The corresponding dis- 
tance to the right of the crossing represents deficiency. It 
is obvious at a glance that the deficiencies are far greater 
than the excesses. The balance, however, is maintained 
by means of interest and mortuary accretions on the over 
payments of the early years. When the age of crossing is 
reached there is on hand the sum of $329, which reserve is 
thereafter drawn upon each year to help out deficiency 
payments. Thus, in the 25th year, the cost of insurance 
is $23, and as the payment is only $16, the balance of $7 
must be taken from the reserve. Exch succeeding year the 
draft will be somewhat heavier on account of the increasing 
cost of insurance, but as the reserve accretions increase 
even more rapidly, the reserve itself constantly grows 
until, at the age of 99, it amounts to $1,000, and thus suf- 
fices to pay the entire claim. The inequality of the two 
sections of this chart illustrates admirably the wonderful 
effects of compound interest and mortuary accretions. 



/P 



l(o 



//. 







267 

The "Natural Premium," or "Increasing Cost" of Protection is greater than the 
Level Premium after age 55. 

At age 60 the Natural Premium is $22.75; at 65 it is $34-39; $53-65 at 70; and $85.48 
at 75; while at 80 it is $138.09. 

Most men are optimistic and they believe that a long life is allotted to them. 
This feeling causes them to look at the cost when they are advanced ages and when 
comparison is made between the Level and Uniform Rate of $16.62 and the rate that 
is $16.86 at 56; $22.75 at 60; $53.65 at 70; and $138.09 at 80, they decide in favor of 
the Level Contribution Rate. 

Their decision often would be otherwise if they considered the cost as set forth 
in the foregoing analysis. 

Yet, it must be admitted, that men of thought and experience and matured judgment 
favor the Level Premium. 

The diagram illustrates its advantages. 

Comparison of Reserves. As there seems to be a rather general impression 
amongst those who have not given special study to insurance questions that reserves 
vary to a considerable extent, according to the mortality table by which they are 
calculated, we have constructed a chart which illustrates in a graphic manner how 
slight the difference really is on contracts for whole-life insurance. 

The data are for age 20, and terminal reserves are used so that the increase as 
representd by the curves is from nothing to $1,000. The dotted line corresponds to 
the Actuaries' Mortality Table; the broken line to the American Experience, and 
the light continuous line to the National Fraternal Congress Table. 

Although these three tables differ materially in death rates at some ages, it will 
be observed that the three lines are almost identical throughout their length. 

The medium continuous line represents a reserve on a contract providing for 
natural premium payments to the age of 70, with a slight reserve loading to keep 
the payments level after that age. Although the reserves under this plan, as it will 
be noticed, begin and end at the same points as those previously considered, yet 
they are very much lower at intermediate points. 

The heavy continuous line represents the reserves under a temporary contract 
terminating at the age of 70. It will be noticed that at the start these reserves follow 
much the same course as those under a whole-life contract, but they they decline 
with great rapidity to zero after reaching a maximum. The table accompanying the 
chart tells the same story in figures. 

It will be noted that the reserves under the National Fraternal Congress Table 
are greater than those under the American Experience for nearly 40 years. At the 
end of the fortieth year there is only $t.oo difference in favor of the latter, the 
individual reserve being $455 and $456 respectively. 

By combining the level and natural premiums the reserve accumulation is kept 
at a moderate sum, being small in the early years of the contract when there are 
many members, and large in the later years when the number of members is small, 
thus avoiding at any period of the contract a large aggregate accumulation. 

On a term contract ending at age 70, in the beginning the accumulation approaches 
in amount the full reserve for a whole life level rate certificate, and greatly exceeds 



268 



Terminal Reserves 4 Per Cent for 
Entry Age 20. 







Ameri- 


Nation- 
al Fra- 
ternal 
Con- 


Modi- 
fied 


N.F.C. 


Policy 


Actu- 


ican 


Natu- 


Term 


Year. 


aries'. 


Expe- 


ralPre- 


to Age 






rience. 


gress. 


mium 
Plan. 


70. 


5 


33 


29 


31 


8 


19 


10 


73 


65 


69 


17 


41 


15 


119 


108 


114 


29 


66 


20 


173 


159 


167 


44 


95 


25 


236 


220 


228 


63 


124 


30 


307 


291 


296 


89 


151 


35 


384 


371 


373 


123 


171 


40 


465 


456 


455 


172 


173 


45 


546 


542 


541 


248 


134 


50 


624 


629 


626 


381 




55 


696 


704 


707 


519 




60 


760 


776 


779 


643 




65 


818 


844 


840 


747 




70 


872 


905 


889 


830 




75 


919 


949 


925 


892 






M.F.C. T£AM To AG* fo 
ACT</AfH£$ Leveui-iF* 
At* BR. f-xfx 1-F.vfJ. Ut **\ 



IQOO. 



CjOO 



$00 



po 



iooo 



Soo 



400 



3oo 



loo 



too 



2o 



2v JlS 3o 3S 40 45 So £5 60 6S 70 7S 80 8f qo <J£ lao 



269 

that of the whole life combined level and natural rate. The term reserve increases 
for forty years, and then rapidly decreases during the last ten years, being nil at 
the end of the fiftieth year, at age 70, when the insurance period ends. 

The most deceptive kind of a reserve is that accumulated under a level premium 
term certificate, because of the increasing accumulation that lulls the confiding into 
a sense of security with a sudden awakening by the rapid disappearance of the 
basis of his hopes. 

The Last Man. Following is from an insurance magazine : 

At frequent intervals one hears the statement that certain organizations can con- 
tinue and pay the last man the face of his certificate, regardless of growth. No in- 
surance organization has ever done this. It is a law of nature that everything must 
either progress or retrograde. If the latter, there comes a time when normal condi- 
tions do not obtain, and then disaster follows. The properly balanced organization 
is one which provides for normal conditions, which does not rely unduly upon growth 
and which does not lull itself into a sense of fancied security for the reason that it 
believes its plans are correct and, therefore, it will perpetuate itself. There must 
be progress if successful results follow. 

Of course an organization will go out of existence if new members are not se- 
cured, because all existing members must eventually die. But it is surprising that a 
well-informed editor should intimate that "the last man" could not be paid if the 
company or society, which has an adequate and scientific plan, ceased writing 1 new 
policies or certificates. 

The Pennsylvania Company for Insurance on Lives and Granting Annuities was 
incorporated and commenced business March 10, 1812. For a number of years the 
company transacted a life insurance business, but finally ceased to accept applications, 
but continued to receive premiums from existing policy-holders and to pay death 
claims as they occurred. 

At the beginning of the year 1901 there were just twenty-four whole life policies 
outstanding, covering $91,500 of insurance. During 1901 there were three policies 
matured by death for $8,000, leaving on December 31, 1901, only twenty-one policies 
in force, with $83,500 of insurance. During the year 1901 the total premium receipts 
were $1,880.24, being $6,119.76 less than the death claims paid, which deficit was, 
of course, made good out of the reserve fund, which latter amounted to $56,975 on 
December 31, 1901. 

Here we have a life insurance business gradually decaying, and yet every claim 
will be paid in full. The reserve accumulation of $56,975 is 67 per cent of the total 
insurance in force — $83,500 — and it will suffice to supplement the premiums in the 
payment of the claim on the "last man." 

Concomitants of Change. The transition from one system to another is always 
attended by friction. 

An omelet cannot be made without breaking eggs, and you cannot right a wrong 
without a disturbance. 

It is as stated by a coal miner when discussing the best method of settling labor 
troubles : "In any great change somebody is going to get hurt." 

When we become accustomed to certain conditions, we are tempted to endure 
evident evils rather than submit to the inconvenience of a change. 

These thoughts come from contemplating the situation of the Modern Woodmen 
of America. 

For twelve months continuous agitation has disturbed the membership of that 
great order. 

Few of its members deny the weakness of the present plan. 



270 

Those who oppose any change base their argument upon the present splendid 
condition of the society, and contend that the present plan will suffice for ten, fifteen 
or possibly twenty years before the cost of protection becomes exorbitant. 

The laissez faire argument is the only one presented in favor of continuing the 
present plan. "Do not interfere with existing conditions, and let the future take 
care of itself," is the sentiment of a very large number of the members. 

But those who take this position do not deny that a change from the present plan 
must be made within a few years. 

There is another large class who favor a change but want a very little change. 
They oppose anything which would be "radical." They favor some makeshift or 
expedient, which usually takes such form as to permit them to virtually remain as 
now, and to throw the burden of increase upon future members, whom they suppose 
will be ignorant enough to join them, and then become burden-bearers for them. 
This course has been taken so many times by other societies that this class of persons 
believe that they can successfully follow it, and that American warkingmen will con- 
tinue to voluntarily make of themselves hewers of wood and drawers of water be- 
cause invited to do so under the guise of fraternity. We place a higher standard 
upon American intelligence than to believe that they can be hoodwinked in any 
such fashion. 

There are a great host of thinking, conscientious members who realize the serious- 
ness of the situation, and who desire an adequate and scientific and safe plan, but 
who are divided as to the kind of a plan which should be adopted. The majority 
of them have a more definite and a clearer conception of their objections to the 
several plans than they have of the particular plan they would favor. 

It is so easy to make objections; so difficult to mark out a satisfactory line of action. 

It is impossible to anticipate the action of the next Head Camp. 

Political trading for personal advantage will possibly determine the action on 
readjustment. 

Were politics eliminated from consideration, and were there no office-seekers to 
influence results, it might be predicted that a change to an adequate plan would be 
made. Some of the head officers believe that such will be the result in spite of the 
handicap of self-seeking politicians. 

Misleading Statements. A society paper contains the following: 

The legal reserve theory is false because it assumes that every policy issued will 
become a claim. This is borne; out by the fact, as shown by experience, that the, 
actual amount needed to meet each one million of insurance written has only been 
$473,000; lapses relieved the companies of the balance. Therefore, if the estimates 
of reserve necessary to "pay the last man" is reduced to one-half the present re- 
quired so-called legal reserve it would appear that the resources will be sufficient 
for every probable contingency. Fraternals anticipate making good any deficiency 
in reserve from greater lapsing, flexible rates and assessments. 

The "legal reserve theory" assumes no such thing as stated. 

The "legal reserve" is the fund required by statute, and has no reference what- 
ever to the fact of assuming or not assuming that "every policy issued will become 
a claim." 

The legal reserve laws take no cognizance of the method of calculating premium 
rates. The only requirement is that a fund must be on hand which will equal the 
difference between the present value of the future premiums and the present value 
of the outstanding insurance obligations. 

If the premium rates are low, the reserve accumulation must be correspondingly 
large, because the present value of low rates is smaller than the present value of 



271 

high rates, and hence it requires a larger fund to make good the difference between 
such smaller value and the value of the obligations — the insurance liabilities are not 
affected by low or high rates — every obligation of $1,000 must be paid, if the or- 
ganization remain solvent, and it cannot reduce that obligation by reducing rates 
nor increase it by increasing rates. 

The legal reserve law confines its operation to knowing whether or not the fund 
makes a balance between the two values of premiums and insurance promises. 

The law cares nothing about the source from which the necessary accumulation 
is obtained, it only has to do with being satisfied that the "legal reserve" is in pos- 
session of the company in cash or in good and acceptable securities. 

Misleading statements are detrimental to the general interests of fraternal orders, 
and those who know better, or ought to know better, should not indulge them be- 
cause they happen to pander to a present prejudice. 

Criticism. To freely and frankly and fairly discuss the questions now before 
the fraternal world is to be more or less critical in all that is written concerning the 
present methods, especially in reference to present rates of assessment of most of 
the fraternal orders. 

Criticism is never pleasant, and consequently it is natural that the officials of 
some orders should feel inclined to resent gratuitous comments which more or less 
reflect upon the conduct of their societies. 

If the criticisms are true, it is not well for any official to feel resentment, though 
he may be temporarily hurt. 

The truth must prevail, and the sooner it is recognized the better for those who 
are not in line with it. 

No one likes to be told of his errors, especially when the telling of them is in a 
public way, and yet the correction of many mistakes is only possible by having them 
publicly pointed out. 

The animus of the criticism should determine whether it is resented or accepted 
in good spirit. 

We should always profit by criticism. At the same time it is impossible for any- 
one to feel other than resentful when the critic is an enemy to the cause, or to the 
organization which is criticised. 

When it is known that the criticism is from a friendly source. and the purpose 
is to serve the best interests of those who are criticised, it can, and should, be ac- 
cepted in a friendly and appreciative way. 

However, a critic is never popular, and he is usually tolerated as a necessary evil. 

A few persons have been heard to deplore this spirit of criticism, and this dis- 
position to point out defects, and this undertaking to present correct principles as 
applicable for successful operation. 

Some persons construe such a spirit, and such a disposition, and such an under- 
taking as evidence of a belief that the fraternal orders are in a very bad way, and are 
going rapidly down hill to the demnition bow-bows. 

That is a narrow and superficial view. 

The fraternal orders are becoming stronger under criticism, because they are 
profiting by it. They are becoming more firmly fixed as life insurance organizations, 
because they are setting about to remedy defects in their plans. 

Criticism never hurts when the criticised person or organization at once sets 
about removing the causes of criticism. 

Criticism strengthens when those who are criticised profit by it. 



272 

Criticism insures success when those who criticise are earnest advocates of the 
subject of criticism. 

A friend's criticism is a power for good, and in no other way is it possible to 
make so great improvement as when there is a mutual and earnest and honest in- 
vestigation of defects within the circle of friendship. 

It is folly to talk of the failure of the grand cooperative effort which has builded 
up the great provident institution known as the Fraternal Beneficiary Societies of 
America. 

It is because they are so great, and because of the glorious future that awaits 
them, that it is necessary to be sure that they are operated upon right lines, and 
that any defects in plan should be cured while they are in the heyday of their 
prosperity. 

For fifteen or twenty years prior to 1895 the critics of fraternal orders were al- 
together found amongst the officers and representatives of "old line" companies. The 
criticism indulged by them was unfriendly, was unfavorable, was unfair and was unjust. 

The fraternal orders grew and prospered, but they did not concede the truth of 
such criticisms, and, therefore, made no effort to profit by them. The criticism did 
not hurt the fraternal orders, neither did it benefit them. The officials of the societies 
resented it, and because of its unfriendliness and unfairness they took no heed, even 
when there was truth in it. 

Since 1895, when the first criticisms were indulged by members of the National 
Fraternal Congress, how different has been the situation. 

The friends of fraternal societies have been investigating their conditions, have 
been studying their positions, and have been undertaking to discover what was neces- 
sary to be done to make them permanent and stable insurance institutions. 

The criticisms which have come from the officers of these fraternal orders, and 
from the editors of the official organs, and from the writers in the independent jour- 
nals have been no less searching, and, indeed, scorching, than the criticisms of' old 
line agents and representatives. 

But there has been a wonderful difference in the effect of these criticisms, be- 
cause they have been made by friends, with friendly intent, and with friendly regard 
for the future of these great institutions. 

The societies have continued to grow and prosper under the criticisms of these 
friends — and they have done more than that, their plans have been improved, and 
steps are being taken to place them upon a firm and sound basis so that they will 
endure for all time. 

Criticism properly made and properly received is the very basis of all progress 
and the foundation for all success. 

The strength of fraternal insurance is shown by its resistance of unfriendly criti- 
cism, and by its acceptance of the criticism which is intended for its improvement. 

Nothing can stop or prevent the progress of cooperation amongst the people, 
because the people are all-powerful. 

Capital and combination may throw obstacles in the way, but ultimate success is 
a certainty for the majority of the provident institutions which are now making it 
possible to protect the home by mutual cooperation. 

The Home of Brotherhood. At the dedication of the Carnegie library in Wash- 
ington, D. C, the donor said : "Free libraries maintained by the people are cradles 
of democracy, and their spread can never fail to extend and strengthen the demo- 
cratic idea — equality of the citizen, the royalty of man. They are emphatically fruits 
of the true American ideal." 



2 73 

A beautiful truth, beautifully clothed ! 

If there is any other institution than the church that is better for a town, or a 
village, or a community, than a public library, it is the lodge room of the fraternal 
beneficiary society. 

The lodge is the home of brotherhood. 

Around its altars gather men who solemnly obligate themselves to protect the 
loved ones of home from the cold embrace of misery, want and despair. 

About the fireside and within the family circle there can be found no more faith- 
ful compliance of pledges to brotherly consideration than in the lodge room of the 
true fraternal society. 

Health and Accident Insurance. The principal benefit granted by the British 
Friendly Societies was that of sickness insurance. For a level and uniform weekly 
contribution there was promised and paid a weekly benefit of a small amount ranging 
from five shillings to ten shillings a week. After an illness had continued for six 
months the weekly benefit was reduced, if originally at ten shillings, to half the amount, 
or five shillings. If the illness or disability continued beyond two years the weekly 
benefit was further reduced to one-quarter pay, or in the case of ten shillings originally 
it was reduced to two and one-half shillings per week. This last benefit was continued 
indefinitely during the disability of the member, even though the disease became 
chronic. The liability for sick pay increased with the advance in age and the friendly 
societies found themselves in an insolvent position because of the large amount of 
claims presented at the advanced ages. The cost of sickness insurance increases 
with the increase in age in the same manner that the cost of life insurance increases 
with the advance in age. The equal and uniform contribution rates for sickness 
benefits failed in their adequacy just as equal and uniform contribution rates failed 
in adequacy for payment of death claims, due, as stated, to the fact that the liability 
for either sickness or death insurance has an increasing cost with the increasing age 
of the membership. 

Very recently there has been great activity amongst what are called health and 
accident and casualty companies in promoting the business of sickness and accident 
insurance. Almost without exception these companies charge an equal and uniform 
rate, but they save themselves somewhat by reserving the right to cancel the insurance 
upon notice. Under such a contract, when the cost of the protection granted becomes 
excessive or exceeds the contribution rates of course they can relieve themselves 
of the insurance liability by cancelling the insurance contract. 

For many years sickness benefits have been granted by fraternal societies, but 
these have been incidental rather than the main business of the organization. Nearly 
every one of the secret fraternal orders grant some form of sickness relief or benefit. 
It has not been in the way of a business, but rather as a relief to those in need and 
only the members who feel themselves in need of the relief apply for it. 

There have been no requirements for valuations either from the health and acci- 
dent companies or from the fraternal societies which have granted sickness and 
accident benefits. However, under the provisions of the Mobile Bill and the later 
New York Conference Bill and under the laws of the States where these bills have 
been enacted, the requirement has been made for the valuation of disability benefits. 
Whether or not the Commissioners will rule that this includes the sick and accident 
benefits is not yet determined. Certainly the provision requires a valuation of total 
permanent disability benefits and there is reason for the requirement of a valuation 
of the sickness benefit where the contract covers the whole period of life or a term 
of years, since the liability increases with age. In Great Britain the friendly so- 



274 

cieties, or at least the registered friendly societies, must make a valuation of their 
sickness benefits every five years. In principle the valuation of sickness benefit is 
the same as the valuation for death benefit. 

Permanent Total Disability. Insurance against permanent total disability is 
included in the insurance for disability on account of diseases or accident, as granted 
by the friendly societies, and as granted by the fraternal beneficiary societies in 
America for many years under the express provision for total and permanent dis- 
ability. In 1902 I completed the first investigation of permanent total disability ex- 
perience for the Knights of the Maccabees of the World, and in 1909 I supplemented 
the experience of that society with its experience from 1902 to 1909 and that for the 
Knights of the Modern Maccabees and of the Royal League and of the Ladies of the 
Modern Maccabees and the Ladies of the Maccabees of the World. The data ob- 
tained by me from the experiences of these societies has been employed in the con- 
struction of several tables which provide for the computation of contribution rates 
for combined death and disability benefits. 

Many fraternal societies grant total permanent disability benefits, and ordinarily 
these are payable in ten equal annual instalments, sometimes in twenty semi-annual 
instalments and sometimes in one payment on proof of disability. Some societies 
require a proof of disability and then a probation period of six months, when a 
second proof must be made and, if satisfactory, the first instalment of the disability 
benefit is paid. After this some societies continue to pay the instalments without fur- 
ther proof. In other cases the society requires proof each six- months or each year 
as the disability instalment is due and payable. Some societies promise to pay the 
certificates by instalments at age 70, provided the member is disabled by age or other- 
wise. Other societies assume total permanent disability at 70 and promise to pay 
the face of the certificate by instalments on attaining that age. 

Within the last three or four years the life insurance companies have taken up 
this form of insurance, first in the way of promising to relieve the policy-holder of 
further premium payments in the event of permanent total disability, if prior to 
age 60. That feature is now contained in the policy contracts of most every insur- 
ance company. Many of them have gone further and promise to pay the face of the 
policy in twenty annual instalments in the event of total permanent disability pro- 
vided it occur prior to age 60, while others do not limit the age, and others pay 
the benefit if the disability occur prior to age 70. Where the premium payments 
are discontinued in the event of total permanent disability sometimes an extra pre- 
mium is charged, sometimes it is not. I believe the Travelers Insurance Company 
was the first to discontinue the premiums in the event of total permanent disability 
and made no extra charge for this benefit. Complaint was made of this practice by 
the Ohio Insurance Department and after that a nominal extra premium was charged 
by the Travelers. Many of the companies, however, make no charge for the dis- 
continuance of premium payments in the event of permanent total disability. Other 
companies have a graded extra premium rate according to the age of the insurant. 
Almost all the companies, as stated, limit the liability for total permanent disability 
benefits or for the discontinuance of premium payments in the event of permanent 
total disability to the occurrence of the event prior to age 60. Almost all of the 
fraternal societies which promise a permanent total disability benefit also promise 
the face of the certificate by instalments at age 70, and hence this provision virtually 
limits the occurrence of permanent total disability prior to age 70. 

Readjustments. It is well that we learn from experience, and an experience 
covering almost any phase of insurance can be found in England. Some of our 



275 

societies have placed new members on adequate rates into classes separate from the 
old members on inadequate rates ; other societies contemplate such a course, 
and under the valuation sections of the laws in States which have enacted the Mobile 
Bill or the New York Conference Bill there is a provisional requirement that such 
separation be made. Writing of a similar provision in the rules of the Manchester 
Unity, Mr. Watson, the actuary, says : 

It is provided by General Rule 82 that in cases wherein lodges reduce benefits 
or increase contributions (or both) under the instructions of the Board of Directors 
the members admitted after the date of valuation or (in certain cases) within the 
five years previous to such date shall receive the full benefits corresponding with 
their contributions ; and such members are to form a new and distinct section in 
respect of which separate accounts are to be kept. 

The meritorious purpose of this provision is to safeguard the interests of new 
members by preventing the absorption of the funds arising out of their contributions 
by the claims of the older members in cases wherein the latter have failed to accumu- 
late adequate reserves against their own liabilities. In connection with the Eighth 
Valuation we were instructed to value the sections separately in all cases in which 
the funds of lodges were divided, and this instruction has brought the system under 
our special notice. The result has been to show to us that the system is, practically, 
of somewhat limited value, notwithstanding the admirable principle which it expresses. 
The first effect of a reduction of benefits or increase of contributions is almost in- 
variably loss of credit, and though tin's may be of temnorary duration only, its re- 
flection is at once seen in the falling off of admissions. Every new section opened in 
such circumstances is numerically weak, often extremely so, and for a lengthy period 
there is little scope for the operation of average results in sickness and mortality 
experiences. The advantage of mutual assurance between the new and old members 
being entirely lost, the young members, thrown on the risk of sickness and death as 
a class apart, are frequently in worse cases than they would have been had their 
contributions been paid into the common fund even with the liability for an existing 
deficiency hanging over it. It is obvious that unless there is a strong probability that 
a steady influx of members will be maintained the "new members' section" must be 
subject to the risk of serious fluctuations — and that neither the accretion of a surplus 
nor the growth of a deficiency in such a section can be regarded as establishing any- 
thing with regard to the adequacy of the contributions of the members comprised in it. 

Whilst it is of the first importance that the interests of young members should 
be protected, we are impelled to the belief, on review of all the facts, that the 
system of separate sections does not substantially achieve this purpose ; as a general 
plan, and excepting special cases, it appears to us to be the better course, whilst in- 
sisting always that financial changes shall be confined to the members who are re- 
sponsible for the existence of the deficiency, to retain the lodge as the unit of the 
assurance organization, summarily closing those few branches which from incurable 
unsoundness are as little likely to obtain new members as they would be unable to 
properly safeguard their interests. 

The concluding suggestion in regard to the retention of, the lodge as a unit is 
applicable to the whole society under the American system of a centralized govern- 
ment, and I have adopted a similar course in advising societies which have fixed a 
scale of adequate rates for new members while leaving the old on inadequate rates. 
My advice has been to keep separate only the accumulation required to maintain 
level and uniform the rates for the new members and to treat as one fund the con- 
tributions for current mortality, and to permit all savings and gains to remain in 
this fund for the advantage of the general membership regardless of the source of 
the surplus. This course has been advised because it is right in view of the fact 
that the new class must be instituted from the expense contributions of existing 
members. Where this relation of mutual cooperation and unity is retained the work 
of securing new members can proceed as when the latter were obtained prior to 
the adoption of an adequate rate scale, and the existing members are assured of all 
advantages from "new blood" and from gains and savings incident to the intro- 
duction of new lives. 



276 

VALUATION STATISTICS. 

Different methods have been adopted for keeping records for statistical purposes, 
each of which has some special advantage. The suggestions hereafter made should be 
considered in connection with existing methods and adapted to the practice of the 
office to produce as little disturbance as possible for the required results. 

One thing I would especially impress : Compile your statistics so that duplication 
of work will not be necessary in obtaining data for the annual report and the valua- 
tion. The usual method of arranging statistics for the annual report to Insurance 
Departments will not supply the required data in proper form for a valuation. But 
the statistics can be prepared to serve both purposes and save double labor. 

Every office should be equipped with statistical cards. The installation of the 
card system is neither so laborious nor expensive as commonly supposed, if the work 
is properly directed. Many offices now have statistical (as well as record) cards. 
Many have not. The suggestions and sample sheets answer for either situation. 

There are three methods of valuation allowed to Fraternal Beneficiary Societies 
under Statutory enactment. In the "New York Conference Bill" they are designated, 
"Net," "Tabular," and "Accumulation" methods of valuation. One form of statis- 
tics is suitable for either method, namely: A sheet giving the amounts of protection 
by ages and years of entry and form of certificate. The best arrangement for this 
sheet is the following: 

Form of Certificate. Amount of Protection. 

Entry — Years of Entry — 

Ages. 1913. 1912. 191 1. 1910. etc. 

18 1000 1000 1000 1000 etc. 

19 1000 1000 1000 1000 etc. 

20 1000 1000 1000 1000 etc. 

21 1000 1000 1000 1000 etc. 

etc etc. etc. etc. etc. etc. 

There must be a separate sheet for each form of certificate. That is, one for the 
Whole Life, one for the Term, one for the Death and Old Age, or other form of 
benefit. The valuation factors are different for the Ordinary Whole Life from those 
for the Term to Age 60, or for the Death and Old Age. With many different forms 
the work of preparing statistics is considerable, unless there are statistical cards 
properly arranged, when the labor is reduced to the minimum. 

Opposite the ages of entry in the columns for the years of entry are given the 
amounts of protection outstanding .as of December 31 for the year of valuation. 

If the "Net" method of valuation is employed, the amounts of protection are 
multiplied by the proper mid-year reserve values. The total of the products will 
give the required "net reserve" accumulation. 

If the "Tabular" method is used, the amounts of protection are multiplied by 
the rates of contribution and the products entered upon a sheet of the form .above 
indicated and then summed upward diagonally from left to right to obtain the con- 
tributions by attained ages and then are multiplied by modified annuities to obtain 
the "present value of future contributions." The amounts of protection then .are 
summed diagonally upward from left to right to obtain the protection at 
attained ages and the amounts are multiplied by modified single premiums to obtain 
the "present value of the promised benefits." The difference between the present 
values of benefits and contributions represents the required accumulation to be in 
possession of the Society to make it technically solvent. 

NOTE. — "Tabular" is hardly description of a valuation of "promised benefits" and "Future Net Con- 
tributions," but is quoted from another in the absence of a better term. 



277 

For whole life contracts, life annuities must be used ; and for term contracts (for 
a designated period or to a given age), temporary annuities must be employed to 
obtain the present value of future contributions. The annuities must be modified to 
obtain "mid-year" values. 

a x+ i 2 = (a x +a x+ i)-r-2. 

Similar single premiums must be empoyed and modified. 

A x +l> = (A x -f-A x+ j) -5-2. 

When monthly contribution rates are to be valued the annuities must be on the 
monthly basis. 

If the "Accumulation" method is adopted, then the amounts of protection are 
multiplied by the proper accumulation factors to secure the required "credits" for 
those members entitled to them. These "credits" correspond to the "net reserve" 
obtained by the "Net" valuation method. In fact, the "Accumulation" method pro- 
duces "net reserves," and these will be identical with the "net reserves" secured under 
the "Net" valuation method when the contribution rates are deduced from the mor- 
tality table used in the valuation, assuming the same rate of interest. The accumula- 
tion factors are obtained by employing the u and k, or u .and c columns in the 
identical manner of computing reserve values per $1,000, assuming the same rates 
of mortality and interest. Or, preferably by employing the accumulation factors 
n U x and n K x . 

It is a simple sheet of statistics that is required for the valuation of certificates 
with level rates of contribution graded to ages of entry. 

It is not a simple matter to those first undertaking the work to extract the re- 
quired data from the records. 

It is not easy to write down a plain statement of the best method of accom- 
plishing the task where statistical cards are not properly kept, or not kept at all. 

In the absence of cards there is always a membership register. The first sugges- 
tion will be in reference to the transfer of the data from the register to the sheet. 

In this connection it is well to caution against the use of statistics carried for- 
ward from year to year by additions and deductions. The numerous changes incident 
to transfers from one lodge to another, and due to lapses, reinstatements, deaths and 
new entrants, make an accurate accounting very difficult. An accurate record is not 
impossible, but it is assured only by everlasting diligence and intelligent checking. 
Where there is such accounting the statistician will know how to secure the valuation 
data without suggestion. 

For transferring the data from the membership register the following form is 
recommended : 

Begin with the first page of the register for members in good standing December 
31st, and make a tally mark opposite the year of entry on the line for the certificate 
amount and in the column for the year of entry. Make a tally for the next member 
in good standing, and continue to the completion of the list. With the form properly 
ruled, two clerks can make the tallies for several thousand in a day of eight hours. 
Large sheets ruled for five squares to the inch (or to suit your case) can be pur- 
chased at almost any book store. Where there are a number of certificate amounts 
it will require several sheets, but with proper arrangement and table space they can 
be manipulated without much trouble. 

If there are record cards instead of a register, the same process will be pursued 
by beginning with the first card in the drawer and tallying successively as stated. 

For example, suppose the first name (on register or card) is of a member who 
entered at age 18, carried a certificate of $500, and joined in 1913. The call would 



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279 

be "18," "500," "1913." The operator would follow the call and be ready to make 
the tally in the right space on the call of "1913-" If the entry age were 45 (or one 
to be entered on a second or third or fourth sheet) the operator soon would be 
able to locate it without delay. The sample form shows tallies as in practice actually 
made. 

When the sheets are completed, the tally marks are counted and the number 
entered in the space (preferably in red ink) for the certificate amount. In the sample 
form, for age of entry 18, and for the several certificate amounts and the year of entry 
1913, there are 18 of the $500 certificates, 42 for $1,000, 11 for $1,500, and 6 for 
$2,000, and a subtotal of 77 certificates and $79,5oo of protection. In the same space 
enter the amounts of protection (equal to the number multiplied by certificate amount). 
By adding together the numbers of certificates for each age of entry and multiplying 
the total by the certificates amount the product should equal the sum of amounts 
for each age of entry, which is a check of the accuracy of the detailed multiplica- 
tions. This gives the total number of certificates and amount of protection for each 
age of entry, and is important information. The sums of the subtotals in the columns 
for years of entry give the total number of certificates and amount of protection by 
years of entry — also important information. The grand totals for entry ages should 
be the same as the grand totals for years of entry, and is the final check of the 
completed sheet. These grand totals should give the total number of certificates 
and amount of protection taken directly from the register or record cards. The 
names on the register, or the cards, could be counted to verify the total number 
of certificates shown on the sheets. Or the comparison could be made with the 
returns from the clerks of local lodges. The application of some effective check 
upon the work should not be neglected. 

If the office has statistical cards, they should be filed by: 1, ages of entry; 2, years 
of entry; 3, certificate forms; 4, certificate amounts. To obtain the data for the 
valuation sheet it is only necessary to count the cards for the certificate amounts 
and enter the number opposite the age of entry, on the line of the amount (one line 
only for each certificate amount) and in the column for the year of entry. For 
example: 18 for $500; 42 for $1,000; 11 for $1,500, and 6 for $2,000. The transcribing 
can be done rapidly from statistical cards, and the checking is facilitated by the 
count of the total cards for each age of entry and all of the years of entry for that age. 

The subtotals of numbers of certificates and amounts of protection should be 
transferred to two sheets for the advantage of compact form, as below. 



NUMBER OF CERTIFICATES. 



Entry 
Ages. 

18. 

19. 

20. 

21. 

22. 







— Years of 


Entry — 




1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals 


77 


7i 


68 


67 


56 


46 


385 


85 


87 


80 


72 


48 


66 


438 


65 


92 


81 


80 


66 


58 


442 


54 


61 


73 


65 


54 


64 


371 


72 


55 


60 


59 


57 


67 


370 



AMOUNTS OF PROTECTION. 

Entry — Years of Entry — 

Ages. 1913. 1912. 191 1. 1910. 1909. 1908. Totals. 

18 $79,500 $76,000 $74,000 $70,500 $57,ooo $46,000 $403,000 

19 92,500 94,500 86,500 76,000 50,500 68,000 468,000 

20 88,000 81,000 91,000 85,000 55,ooo 71,000 471,000 

21 79,000 66,000 72,000 74,000 48,000 57,000 396,000 

22 69,000 72,000 61,000 65,000 64,000 44,000 375,ooo 



280 

These sheets (with a carbon) can be made in a few minutes on an adding ma- 
chine with eighteen-inch carriage, and have the advantage of totals for checking. 

The sheet giving the number of certificates is of no use to the valuer. The sheets 
giving the amounts of protection by ages and years of entry is the one required 
by him. 

Both sheets can be used by the office in preparing schedule VI of the annual 
report for Insurance Departments. 

The number of members (or the number of certificates, which will answer the 
purpose of the report) at attained ages is obtained by diagonal upward summation 
of the numbers in the first sheet, assuming the entry age in the current years as the 
attained age December 31 of that year. (In fact, on the average, the members are 
one-half year older on December 31 of the calendar year, and this fact is taken into 
consideration in making a valuation or in a mortality investigation.) 

Thus: There would be 77 members (certificates) at attained age 18. At attained 
age 19 there would be the 85 entrants at age 19 in 1913 and 71 entrants at age 18 
in 1912, making 156 as the number at attained age 19. Similarly for attained age 
20 we have the sum of the 65 entrants at age 20 in 1913, and 87 entrants at 19 in 
1912, and 68 entrants at 18 in 191 1, making 220 as the number at attained age 20. 
For attained age 21 the summation would be 54+92+80+67 equal 293. For age 22 
the summation would be 72+61+81+72-1-56 equal 343. The same process is continued 
for other ages. The work is facilitated by diagonal ruling of the sheets. 

The amounts of protection at attained ages are obtained by the identical pro- 
cess explained for members. 

The above procedure gives the number of certificates and amounts of protection 
by attained ages for each form of certificate. The same for the different forms 
(if there is more than one form) of certificates must be combined into one column 
for members and one for protection as the exhibit for schedule VI. 

The totals of members and amounts thus obtained for attained ages should 
correspond with the grand totals by ages and years of entry. 

Schedule VI also calls for "the Mortuary Assessments received during the year." 
This has been construed to mean the total amount of the contributions less the ex- 
pense deductions. This is obtained by getting the net monthly contributions for 
each form of certificate (gross rates less expense deductions) and using these as 
multipliers for the protection at ages and years of entry. Thus : If the Whole 
Life Net Rate per $1,000 at age 18 is 68 cents, and assuming that the sample sheet 
shows the protection for the Whole Life form, 68 would be multiplied by 79.5, 76, 
74, 705, 57, and 46, and the products entered on a sheet for contributions by ages 
and years of entry, thus : 

AMOUNT OF ONE ASSESSMENT. 

Entry — Years of Entry — 

Ages. 1913. 1912. 191 1. 1910. 1909. 1908. Totals. 

18 54.06 51.68 50.32 47.94 38.76 31.28 274.04 

etc etc. etc. etc. etc. etc. etc. etc. 

The total of $274.04 will be given if a cross tabulating adding machine is used, 
and its correctness is checked by the product of the total protection by the contribu- 
tion rate per $1,000.00, or 403X68 equal 274.04. 

The amounts of protection for other ages and years of entry are multiplied by 
the corresponding net rate for the respective ages of entry and the products entered 
as for age 18. 



281 

When the sheet has been completed a diagonal summation from left to right will 
give the amount of one assessment at attained ages, which, multiplied by 12, gives 
the amount of 12 assessments on the protection in force December 31. Similar sheets 
must be made for each form of certificate and all combined for the total contributions. 
The amounts thus finally obtained must be modified to secure a total corresponding 
with the actual cash received from the net contributions during the year. This modi- 
fication is made by dividing the total, as above obtained, into the actual total receipts, 
and use the quotient as a multiplier for the amounts at each attained age, which are 
obtained from the diagonal summation. 

If ithere is a considerable difference between the cash receipts from net con- 
tributions and the total of 12 .assessments obtained from the combined sheets, some 
error has probably been made and should be found. 

Obviously 12 assessments would not be received on the certificates written in 
the current year (1913 in the example), because ithe members are admitted in every 
month of the year. The average number of assessments received from the 1913 en- 
trants would not exceed 6 ,and might be 5- The foregoing method, therefore, would 
overstate the contributions received in the current year, but this excess, ordinarily, 
is offset by the amounts received from members who lapse and die during the year, 
which receipts are not shown in this exhibit. Under normal conditions the method 
1 given will approximate the actual facts. As stated, if the difference between the 
actual receipts and the estimated under this process is very large, then it may be 
necessary to take the average number of assessments received in the current year, 
and also find approximately the receipts in /the year from those who paid one or 
more assessments before] death or lapse, in order to furnish a satisfactory column 
for schedule VI of the annual report. This seldom occurs. 

Many valuations were made in 1913 for Fraternal Beneficiary Societies and dif- 
ferent methods were adopted to obtain the valuation data. The statistician of one 
society adopted the following form : 

NUMBER OF MEMBERS. 

Years of — Attained Ages — 

Entry. 18. 19. 20. 21. etc.. 

1909 ... ... 10 etc. 

1910 ... 28 39 etc. 

1911 99 134 171 etc. 

1912 93 167 168 193 etc. 

Totals 93 266 330 413 

In this form the ages are at the top instead of at the side of the sheet, and the 
footings of columns give the total number at attained ages. The number at ages of 
entry would be obtained by diagonal summation from left to right. The above shows 
the combined form for members. To obtain the same for protection, first it would 
be necessary to get the details for certificate amounts. 

Another form is to have the ages at the side and the years at the top of sheet, 
but to begin with the first year of operation for the first column at left, and the 
current year for the last column to the right. In such form the diagonal summation 
must be upward from right to left to obtain attained ages. The work under this 
method is awkward to most operators. 

The means to the end are immaterial so far as results are concerned. However, 
they should be chosen to suit office conditions, and the foregoing details are given 
in the way of suggestions for the accomplishment of results. 



282 

When the data are in proper form the cost of valuation should be much reduced. 
Indeed, the secretaries should agree upon a uniform blank for reporting statistics, 
and should secure a scale of fees from valuers on the ordinary forms of certificates. 

As the situation now is, the actuary has great difficulty in making an advance 
estimate of his charge for valuation. In the first place, it may be necessary to com- 
pute special valuation factors. In the second place, he may have to rearrange or 
combine the data before they can be utilized — and very often must have errors cor- 
rected which have been committed through lack of proper checking. 

In passing, it may be remarked that the first valuation under Section 23b of the 
New York Conference Bill will always involve more work and a larger charge than 
subsequent valuations. This is also true of valuations under Section 23 and 23a 
where valuation factors must be computed for special forms of certificates. These 
factors serve for subsequent valuations. 

If the "Tabular" method of valuation is adopted, the society could reduce the fee 
for valuation by making the multiplications of the net contribution rates by the 
amounts of protection for ages and years of entry. Or the office could save the time 
and labor of this work by having the results furnished by the valuer — it being re- 
membered, as hereinbefore shown, that these data can be used not only for the 
valuation, but also in the preparation of schedule VI of the annual report. 

At the next meeting of the National Fraternal Congress of America the secre- 
taries' section could spend some time profitably in consideration of these matters. 

The forms suggested for the compilation of the number of members (or certi- 
ficates) in good standing and the amount of protection in force as of December 31, 
are suitable for the compilation of statistics to show the number of deaths and lapses 
during the current year by ages and years of entry and by attained ages. If these 
statistics are prepared, then a close estimate can be made of the amount contributed 
during the year by those who have lapsed and died by assuming an average of six 
assessments for entrants in all years excepting the current year, and for that year 
assuming three or four assessments, according to whether or not the first assessment 
is paid at date of entry, or at the end of the month, or in the month after admission. 

In cases where the amount of the certificate is scaled for a number of years, or 
where the protection increases from first year of entry during Life Expectancy, 
or at age 70, or until a designated amount is paid in assessments, the statistics are 
compiled as of the face of the certificate in the manner described. The valuer will 
make modifications by proper deductions for actual insurance in force at date of 
valuation. 

Societies having natural premium rates (contributions increasing annually) can 
secure amount of contributions by multiplying the protection at attained ages by 
twelve times the rates of contribution, for respective attained ages and deducting for 
the current year as indicated for the average number of assessments collected in 
that year. 

The management should be informed each year concerning the Mortality ex- 
perience of the Society. There is very little extra work involved over that of mak- 
ing a valuation, for the valuer to report upon the mortality experience. The addi- 
tional data are the amounts of claims by attained ages. These can be obtained by 
compiling the statistics for certificate amounts at ages and years of entry on the 
claims incurred during the year and then summing diagonally for attained ages, as 
explained for amounts of protection in force. In order to closely approximate the 
amounts of protection exposed to risk during the year there should be given the 
protection at attained ages on the previous December 31, that the mean of the pro- 
tection at the beginning and end of the current year could be ascertained, which 



28 3 

added to the claims incurred at attained ages, will give the protection exposed at 
attained ages during the year. From these data the loss rates per $1,000 are obtained. 
If death rates pen 1,000 are desired, then the number of members (or certificates) 
should be treated instead of amounts of protection. 

If it were concluded (and it is desirable) to investigate the past mortality ex- 
perience for comparison with the current year, it would suffice (for approximate and 
practical results) to furnish the amounts of protection and the amounts of claims 
incurred, as reported in schedule VI, for as many years as .the report had been made. 

I will make some examples of valuation by use of the foregoing sample exhibit 
of protection by ages and years of entry. 

The first illustrates the net reserve valuation. I have taken the "terminal" instead 
of the "mid-year" values for the reason that they are found in the Appendix to this 
book for ordinary whole life protection, which is assumed in this case. For ages 18, 
19 and 20 I have used the reserve values for age 20. Assuming that the insurance 
was written and in force January 1st of each year, at the end of 1913 there should 
be, and there is supposed to be, the terminal reserve at the end of one year for 1913 
issues; at the end of three years for the 1912 issues; at the end of four years for 191 1 
issues ; ... at the end of six years for the 1908 issues. Therefore, we would 
multiply the protection issued in 1913 by the terminal reserves at the end of one 
year for ages 20, 21 and 22, being (see Table of Reserves) $.00578, $.00604, $.00632 
(or $5.78, $6.04 and $6.32 per $1,000 protection). The protection issued in 1912 would 
be multiplied by the reserve values at the end of the second year; and similarly for 
other years of issue. 

The following table exhibits the protection and net reserve values. The total 
protection of $2,113,000 requires $43,566.56 in reserve accumulation as supplemental 
to the present value of future contributions to make it equal to the present value of 
promised benefits. 

Protection by Ages and Years of Entry. 



Entry 


Years of Entry. 


Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1098. 


Totals. 


18 
19 
20 
21 
22 


79,500 
92,500 
88,000 
79,000 
69,000 


76,000 
94,500 
81,000 
66,000 
72,000 


74,000 
86,500 
91,000 
72,000 
61,000 


70,500 
76,000 
85,000 
74,000 
65,000 


57,000 
50,500 
55,000 
48,000 
64,000 


46,000 
68,000 
71,000 
57,000 
44,000 


403,000 
468,000 
471,000 
396,000 
375,000 


Totals . . 


408,000 


389,500 


384,500 


370,500 


274,500 


286,000 


2,113,000 



Terminal Reserve Values. 



Entry 

Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


-18 
19 
20 
21 
22 


459.51 
534.65 
508.64 
477.16 
436.08 


896.04 

1114.16 

954.99 

813.12 

928.08 


1334.22 
1559.60 
1640.73 
1357.20 
1202.31 


1729.37 

1864.28 
2085.05 
1S96.62 
1742.00 


1782.39 
1579.14 
1719.85 
1568.64 
2185.60 


1760.42 
2602.36 
2717.17 

2278.86 
1838.32 


7961.95 
9254.19 
9626.43 
8391.60 
8332.39 


Totals . . 


2416.04 


4706.39 


7094.06 


9317.32 


8835.62 


11197.13 


43566.56 



284 

In the ordinary valuation of certificates issued throughout the year, one-half a 
year duration is assumed, and "mid-year" reserve values must be employed. I have 
fully explained the method of obtaining "mid-year," or "mean" reserve values. (See 
"Definitions.") 

The tabular reserve values assume a net contribution rate deduced from the Mor- 
tality Table from which the Reserve Values are derived. 

The foregoing is designated a "net reserve valuation," and the total of $43,566.56 
would be reported as the net reserve liability. For technical solvency the society 
or company should have net assets not less than the reserve liability. 

Under the "legal reserve," or net valuation laws for life companies, the writing 
of new business would be suspended should the net available assets be shown on 
valuation to be less than the reserve value of the outstanding policies. And should 
the company fail to make good the impairment within a given time it would be 
barred from doing business in foreign States and placed in the hands of a receiver 
in the home State. 

The valuation laws for fraternal beneficiary societies are less stringent. The 
most recent enactments have been given (in substance) under the title of "The New 
York Conference Bill," pages 66-72. 

The second example will exhibit the results of a valuation of the promised ben- 
efits and future net contributions as in practice actually collected, on the assumption 
of whole life protection. Instead, however, of taking the tabular net premiums, the 
contribution rates will be 

For age 18 annually $7.20 per $1,000. 
For age 19 annually $7.80 per $1,000. 
For age 20 annually $8.00 per $1,000. 
For age 21 annually $8.20 per $1,000. 
For age 22 annually $8.40 per $1,000. 

The protection for each age and year of entry is multiplied by the rate for the 
age of entry. That is, 7.20 is the multiplier for 79.5; for 76.0; for 74.0; for 7°-5 ; for 
57.0; and for 46.0. The results are as follows: 

Protection Multiplied by Contributions. 



Entry 

Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


IS 
19 

20 
21 
22 


572.40 
721.50 
704.00 
647.80 
579.00 


547.20 
737.10 
048.00 
541.20 
004.80 


532.80 
074.70 
728.00 
590.40 
512.40 


507.00 
592.80 
0S0.00 
606.80 

540.00 


410.40 
393.90 
440.00 
393.00 
537.00 


331.20 
530.40 
50S.00 
407.40 
369.60 


2901.00 
3050.40 
3708.00 
3247.20 
3150.00 


Totals . . 


3225.30 


3078.30 


3038.30 


2933.20 


2175.50 


2200.00 


10717.20 



Summing diagonally the protection and the products of protection by contributions, 
the following columns of protection and amount of one year's contributions are 
obtained for attained ages. Then multiplying by the single premiums for whole 
life insurances and annuities the present values of the protection and future contri- 
butions are obtained. 

As hereinbefore explained, for a valuation as of December 31, for certificates 
written in every month of the year of issue, the single premiums for insurances and 
annuities must be modified to give "mean" or mid-year" values. 



2 85 



In the following it is assumed that the certificates were issued January i of each 
year, and hence terminal values arc given by using the whole lif ( - single premiums and 
annuities taken from the Table in the Appendix. $2ir.86 is the multpilier for the 
protection at attained ages 18, 19 and 20; $216.42 at 21 ; . . . $247.75 at attained 
age 27. The whole life annuities used were 20.49 for attained ages 18, 19 and 20; 
20.37 f° r 21 ; . . . 19.56 for 27. The results follow : 



Attained 


Protection. 


Value of 


One Year's 


Value of 


Required 


Age. 


Protection. 


Contributions. 


Contribution. 


Accumulation. 


is 


79500 


16842.87 


572.40 


11728.48 


5114.39 


19 


168500 


35098.41 


1208.70 


25995.00 


9702.75 


20 


250500 


54342.09 


1973.90 


40445.21 


13890.88 


21 


317000 


68605.14 


2478.10 


50478.90 


18120.24 


22 


359000 


70390.44 


2S52.00 


57753.00 


21043.44 


23 


325500 


73589.04 


2000.30 


52318.04 


21271 .00 


24 


258000 


59047.02 


2089.00 


41771 .10 


17875.92 


25 


184000 


43517.84 


1507.00 


29925.80 


13591 .98 


20 


121000 


29285.03 


1005.00 


1980S. 55 


9477.08 


27 


44000 


10901.00 


309.00 


7229.38 


3071.02 




2113000 


471825.48 


16717.20 


337454.18 


134371.30 



The present value of $2,113,000 of promised death benefits is found to be $471,- 
825.48. The present value of the future contributions expected to be received on the 
$2,113,000 of protection is $337,454.18. The required accumulation to balance the 
present values is $134,371.30. The latter is the reserve liability, and the society 
should have in possession net assets equal to or greater than this liability to be in ;i 
technically solvent position. 

Had I taken the tabular rates of contribution, namely: 

For age t8 annually $10.34 per $r,ooo. 

For age 19 annually $10.34 per $1,000. 

For age 20 annually $10.34 per $1,000. 

For age 21 annually $10.62 per $1,000. 

For age 22 annually $10.92 per $1,600. 

the present value of the future contributions would have been increased and Un- 
required reserve accumulation decreased to $43,566.56, being identical with the 
amount obtained by the net reserve valuation. The curious can readily test the 
statement by multiplying the protection by the above rates to obtain the amount of 
one year's contribution, summing diagonally for attained ages and then multiplying by 
the whole life annuities as before. The present value of the future expected net con- 
tributions will be increased to $428,258.92, which subtracted from the present value 
of the protection, $471,825.48, will give the required accumulation of $43,566.56. 

It will be noticed that the change in contribution rates does not affeet the value 
of the promised benefits. Neither the method of making contributions nor their 
amount have anything to do with the value of the protection. If learned this would 
be a valuable lesson to many officials. 

Reference is again made to the fact that the two preceding methods are known 
as ''Prospective Valuations." 

The past is not considered. 

The present position of the Society or company is determined, and then it is 
undertaken to forecast the future and bring expected future claims and future con- 



286 

tributions to present money worth, and, by assuming these present values a part 
of the present position, to show whether or not the Society or company is technically 
solvent. 

The Prospective Valuation is based upon estimates and assumptions. 

This declaration applies equally to a "Net Reserve Valuation" and to a valuation 
of "Promised Benefits" and of "Future Net Contributions." 

The third example illustrates a valuation on the "Accumulation Basis." 

Instead of using the u and k columns as recommended by Mr. Anderson in his 
book explanatory of this method of valuation I find it more convenient and expedi- 
tious to apply directly the n U x and n K x values. 

In the chapter on "Definitions" I have given the formulas for the u and k col- 
umns and for the n U x and n K x accumulation values. In previous chapters I have 
also given the formulas by which these columns and values may be determined. 

A valuation on the "Accumulation Basis" is a "Retrospective Valuation." It is 
looking backward and reviewing past operation and making an exhibit of the present 
position as developed from past operation. 

Were we to assume that the past mortality experience and past interest earnings 
and past contributions rates were, for example, according to the National Fraternal 
Congress Table of Mortality and 4 per cent interest, then a "Retrospective Valuation" 
would bring out an identical reserve liability as obtained from the "Net Reserve" and 
"Tubular" Valuations. 

However, it will be seen from the following exhibit that the reserve liability will 
not be the same as produced by the "Tabular" method with the same assumptions 
of mortality and interest and contribution rates, where the latter are not the contri- 
bution rates derived from the mortality table and interest rate employed in the 
valuation. 

That is to say, were we to value the annual rates $10.34, $10.62 and $10.92 for 
entry ages 18, 19, 20, 21 and 22, the reserve liability by the "Accumulation" method 
and the "Tabular" method would be identical with that of the "Net Reserve" method. 

When we value the annual rates $7.20, 7.80, $8.00, $8.20 and $8.40, the reserve 
liability under the "Accumulation" method differs from that of the "Tabular" method, 
and both differ from that of the "Net Reserve" method. 

Technically, the "Net Reserve" method ignores the "contributions as in practice 
actually collected." 

Net Reserve Values are prepared in advance of valuation, and these values are 
computed on the assumption of contribution rates deduced from the standard table 
of mortality and designated interest rate. 

These values are then arbitrarily fixed by law as the measure of technical solvency, 
and hence are known as "legal reserves." 

Therefore, the results of a "Legal Reserve," or "Net Reserve" Valuation are 
obtained from the determination of the reserve liability, and whether or not the 
net assets in hand are equal in amount to such reserve liability. 

If the requisite net assets are in possession of the society or company the valua- 
tion requirements are met and no questions are asked concerning the contribution 
rates "as in practice actually collected," nor concerning the mortality and interest 
assumptions employed in the computation of rates of contribution. However, all of 
these facts are disclosed in the "Gain and Loss Exhibit" required of life companies. 

While absolute liberty is left to the Society or company in respect of premiums 
or contributions, this fact should never be forgotten: The Required Reserve Accu- 
mulation will not be in hand, unless the Contribution Rates, as in practice actually 



287 



collected, have been computed upon the same (or more favorable) Mortality and 
Interest Assumptions used in the Calculation of the Net Reserve Values prescribed 
as Legal Reserves. 

The values of the n U x and n K x , on the basis of the National Fraternal Congress 
Table of Mortality and 4 per cent interest, are not in print, and so far as I am 
informed, the only manuscript tables are in my office.* These have been computed 
specially for "retrospective valuations," particularly under provisions of Section 23b. 

There is a separate value of U and K for each age of entry and year of duration 
(or year of issue). The following are the products of the contribution rates by 
n U x and then by the protection, and the products of n K x by the protection. 

The results in the first instance exhibit the accumulated past contributions as 
credits to those carrying the protection in force at date of valuation. And in the 
second instance, the accumulated past assumed claims chargeable against those carry- 
ing the protection at date of valuation. 

As with the other valuations, I do not use modified factors for "mid-year" values 
in obtaining the following results : 

Accumulated Values of Past Contributions. 



Entry 


Years of Entry 


Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


18 
19 
20 
21 
22 


598.16 
753.97 
735.68 
676.95 
605.68 


1169.91 
1575.92 
1385.42 
1157.09 
1293.06 


1747.58 
2213.02 

2387.84 
1936.51 
1681.18 


2271.00 
2652 . 19 
3042.32 
2715.43 
2443.35 


2348.72 
2254.29 
2518.12 
2252.57 
3077.22 


2327.67 
3727.65 
3991.90 
3285.35 
2598.29 


10463.04 
13177.04 

1406 1.2S 
12023.90 
11698.78 


Totals . . 


3370.44 


6581.40 


9966.13 


13124.29 


12450.92 


15930.86 


61424.04 



Accumulated Values of Past Claims. 





1913. 


1912. 


1911. 


1910. 


1909. 


1908. 




18 
19 
20 
21 
22 


399.89 
465.28 
442.64 
399.74 
351.90 


783.56 
974.30 
835.11 
685.74 
753 . 12 


1175.12 
1373.62 
1445.08 
1151.28 
983.32 


1531.97 
1651.48 
1847.05 
1620.60 
1435.20 


1590.30 
1408.95 
1534.50 
1349.76 
1815.68 


1578.26 
2333.08 
2436.01 
1977.33 
1540.44 


7059.10 
8206.71 
8540.39 
7184.45 
6879.66 


Totals . . 


2059.45 


4031.83 


6128.42 


8086.30 


7699.19 


9865.12 


37870.31 



The total credits in the way of accumulated past contributions is $61,424.04. 

The total charges in the way of accumulated past claims is $37,870.31. 

The net fund in hand to equal the net reserve assumed to be accumulated, ^23,- 
553-73, is the difference between the totals of credits and charges. 

As a matter of fact, the actual net fund in hand at date of valuation may be 
(and usually is) less or larger than this difference between the credits and charges. 

1. The past mortality may have been more or less favorable than assumed. 

*(Note. Sets of the n U x and n K x values can be purchased at a reasonable price.) 



288 

2. The interest earnings may- have been larger or less than assumed. 

3. There may have been (and usually are) forfeitures of accumulation by with- 
drawing members. 

4. There may have been (such things have been known to occur) transfers from 
unusued expense funds to the surplus or reserve accumulation. 

5. There may have been (and under past society conditions almost invariably have 
been) appropriations of contribution excess to relieve members from the full payment 
of the cost of their protection. 

6. There may have been losses from bad investments, or from other causes. 

(a) If past mortality were more favorable than assumed, the actual to be expected 
accumulation should be increased. The reverse, if less favorable. 

(b) If past interest earning were larger than assumed the actual to be expected 
accumulation should be increased. The reverse, if the earning were less. 

(c) If there were forfeiture of accumulation by lapse, the accumulation for the 
persistent survivors should be increased. 

(d) If there were transfer from expense fund to accumulation the latter should 
be larger than expected. 

(e) If there were appropriation of excess of contributions over insurance cost 
for the use of members who paid less than cost, there would be a decrease in the 
actual accumulation. 

(f) If there were loss from bad investments, or otherwise, the actual accumulation 
would be decreased thereby. 

For making a Retrospective Valuation, Mr. Ekern, the Insurance Commissioner 
of Wisconsin (the author of Section 23b), and Mr. Anderson, the Actuary, have rec- 
ommended modified k columns for use in fixing the claims and establishing the 
charges. These modifications are worked out by taking percentages of the q x col- 
umns derived from some standard mortality table. They also recommended an 
interest rate in computing u which approximates the interest rate actually earned. 

These recommendations, if followed, would produce a close agreement between 
the actual accumuation and that obtained by valuation, if there were no other account 
ing than for actual death-rate and interest rate. 

Speaking from a large experience in these matters, I assert that items 3 and 5 
(c and e), as stated above, exert more influence (in the majority of instances 5 (e) 
alone is more potential) than 1 (a) and 2 (b) combined. 

The gains from forfeitures by lapse (c) are never very large, nor is the loss 
from bad investments or otherwise (f) very great, but the appropriations of excess 
contributions to make good deficiencies in contribution rates (e) reduce to a con- 
siderable degree the percentage of the actual to the expected accumulation. 

Hence, if the recommendations of Mr. Anderson were followed, always there 
would be necessary an adjustment after valuation to bring actual and valuation accu- 
mulation into agreement. 

In these circumstances, my practice is to make the valuation by use of the 
accumulation factors n U x and n K x , based on some standard mortality table and 
rate of interest that most nearly approximate the actual mortality experienced and 
interest earned. 

The accumulation obtained from the valuation will not be identical with the 
actual accumulation (and neither are they by use of modified k columns). The two 
are brought into agreement by arbitrary adjustment; or I simply report the facts 
(my invariable course to the Society), exhibiting a surplus or deficiency as the case 
may be. 



289 

And why not? 

In the valuation of any life company in existence has it ever been known that 
the reserve accumulation shown in the valuation was identical with the actual net 
accumulation? 

It is practically impossible under any method of valuation to bring out results 
in perfect accord with the facts. 

Therefore, I hold that the direct application of the accumulation factors, n U x 
and n K x , is preferable in practice to the use of modified valuation columns, for cer- 
tainly it is more simple and expeditious and the difference between actual and ex- 
pected accumulation for adjustment is not materially larger than when the Anderson 
method is employed. 

I intend no criticism nor reflection upon Mr. Anderson's method, I merely ex- 
press a preference for my method, and state the reasons. 

Let us come back to the exhibit for the Retrospective Valuation, which has been 
made by the employment of accumulation factors derived from the National Fra- 
ternal Congress Table of Mortality and 4 per cent interest — the same assumptions 
as in the other two valuations. 

It is shown that the expected accumulation is $23,553.73. 

If the actual accumulation is larger, the surplus arises out of gains and savings 
from sources heretofore indicated. 

If the actual accumulation is smaller, the deficiency has been created by one or 
all of the causes hertofore enumerated. 

In either case the results of the Retrospective Valuation clearly indicates the 
course of past operation, and with its detailed information is singulary suited as a 
guide for making adjustments in establishing equitable relations between the members, 
and equally so for making readjustments of contribution rates to assure future 
solvency. 

Without the results of a Retrospective Valuation, it is difficult, if not almost 
impossible, to make a satisfactory apportionment of accumulated funds amongst mem- 
bers contributing at rates inadequate for the promised benefits. 

When a Society has two classes of members with one contributing at rates as- 
sumed to be adequate to provide for the benefits promised, and the other contributing 
at rates admitted to be inadequate, or where such separation is contemplated, the inad- 
equate rate certificates should be valued by the retrospective method. This suggestion 
is independent of the acceptance of the provisions of Section 23b in respect of appor- 
tioning credits and charges with a view to collecting the excess of charges in the 
way of increased assessments. 

In the chapter on "Definitions,'' where I review valuations, it is stated that a 
Prospective Valuation becomes a farce and of no effect when there is a great differ- 
ence between the values of promised benefits and future contributions, and therefore, 
I have asserted — and now repeat the assertion after further deliberation — that the 
Retrospective Valuation, in such cases, alone will be educational, or can be turned to 
practival advantage. 

For Fraternal Beneficiary Societies the Retrospective Valuation generally is to 
be preferred to the Prospective Valuation. 

The Net Reserve method of valuation is applicable entirely to very few fraternal 
societies, because few have all members on adequate rates. Further than this, the 
results of a Net Reserve Valuation give less information than those of other methods, 
and are not as effective for educational purposes. And still, further, because of the 
varied and exceptional contract conditions of fraternal society certificates, the ordi- 
nary reserves to be had in book form are not applicable, and hence special tables 



290 

must be prepared for individual societies, which is a much more expensive work than 
preparing single premiums for insurances and annuities for a "Tabular" valuation. 

For a valuation on the "Accumulation Basis" the n U x and n K x factors can be 
employed for almost any form of certificate providing for a death benefit only, or 
death and old age benefit. 

Of course, in any case, values must be derived from combined death and dis- 
ability tables where combined death and disability benefits are promised. 

To be more explicit concerning the different results obtained by the different 
methods of valuation specific comparisons will be made. 

First, the "Net Reserve" Valuation, assuming tabular premiums and death rate 
and 4 per cent interest, shows a required accumulation of $43,566.56 on the $2,113,000 
whole life protection outstanding at the date of valuation, for entry ages 18, 19, 20, 
21 and 22, and issued in the years 1913, 1912, 191 1, 1910, 1909 and 1908 as of January 
1 of each year, and valued as of December 31, 1913. 

The meaning is, that tabular reserves per $1,000, previously prepared, were em- 
ployed as multipliers to obtain corresponding reserves on the thousands of protection 
in force; and according to arbitrary assumptions of mortality and interest the total 
required accumulation is $43,566.56, and that if this amount, above all accrued liabil- 
ities and debts, is not in hand the Society is, to the degree of deficiency, technically 
insolvent. 

The "Net Reserve" is a Prospective Valuation in effect, because the accumulation 
of $43,566.56 is required to supplement future contributions in order to provide for 
♦he promised benefits under the $2,113,000 of protection. 

Second. The (so-called) "Tabular" Valuation assumes tabular death rate and 4 
per cent interest for the future, but assumes contributions less than the tabular, and 
shows a required accumulation of $134,371.30 on the $2,113,000 of whole life protection. 

The meaning is, that the present money worth of $2,113,000 of whole life protec- 
tion — the present value of the Benefit Side of the insurance contracts is $471,825.48, 
while the present money worth of all future contributions expected to be received — 
the present value of the Payment Side of the insurance contracts — is $337,454.18; 
and if the Society has not the difference, $134,371.30, between these present values, 
then it, to the degree of the deficiency, is technically insolvent. 

In other words, it is arbitrarily expected that the death rate and interest rate 
for the future will be on the average identical with the assumed in the valuation, 
and that the present contribution rates will continue. Under these assumptions there 
should be in hand, at date of valuation, $134,371.30 to supplement future contributions 
in order to provide for the promised benefits under the $2,113,000 of Whole Life pro- 
tection. 

Third. The valuation on the "Accumulation Basis" assumes tabular death rate and 
4 per cent interest in past operation, but assumes contributions in the past less than 
tabular premiums, and shows that $23,553.73 should have been accumulated on $2,113,- 
000 during past operation to the date of the valuation. 

The meaning is, that if the past mortality had been according to the National 
Fraternal Congress Table, and had 4 per cent been earned on invested funds, and the 
annual net contributions as stated, then the Society should have in hand $23,553.73. 

From the meaning of the three valuations let us determine the value of the 
information derived from each — and it is to be supposed that the prime object of a 
valuation is the information to be derived therefrom for some specific purpose on the 
part of Insurance Commissioners as well as on part of officers and members of 
societies and companies. 



291 

The Net Reserve Valuation gives the least information for practical purposes. 
The usual method of making the valuation is not that given in the foregoing illustra- 
tion, but reserve values are entered upon cards and the amounts listed on adding 
machines, and the final total is reported as the reserve liability. The information given 
by a Net Reserve Valuation is little more than a mere announcement of an assumed 
accumulation requirement for expected conditions arbitrarily anticipated. 

There is more of material information in the results obtained from the (so-called) 
"Tabular" Valuation. It exhibits the present worth of the insurance liability and the 
present worth of the contribution assets, and thus is more readily understood by the 
average man. It is educational in effect, because anyone can be made to see that 
by increasing the contribution rate there is a corresponding increase in the present 
worth of future contributions, because a higher rate must have a greater value. If 
the assumptions of future death rate and interest rate are conservative, the results of 
the "Tabular" valuation may be relied upon as a safe index for future operation, 
and a sure monitor against inadequate rates. The usual form that exhibits the value 
of protection and contributions by attained ages is more or less misleading. To in- 
stance : For attained age 23 there is shown the amount of $325,500 of protection, being 
the sum total of $72,000 issued at 22 in 1912; $72,000 at 21 in 191 1; $85,000 at 20 in 
1910; $50,500 at 19 in 1909; and $46,000 at 18 in 1908. Similarly, the present value of 
$325,500 of insurance is the total of present values of these amounts issued at different 
ages and in different years. Likewise, the present value of contributions at attained 
age 23 is the total of the present value of contributions at different contribution rates. 
The exhibit of this latter condition is misleading, because for the same attained age 
some members might be contributing at rates that create deficiencies while others 
might be contributing at rates yielding a surplus over current insurance cost at the 
attained age. Notwithstanding this all are thrown together at the one attained 
age, and their combined contributions valued by taking the annuity at that age for 
the common multiplier. 

The valuation on the "Accumulation Basis" accumulates the past actual contribu- 
tions made by the members. True, this accumulation is on the assumption of mor- 
tality and interest only approximating the actual, nevertheless it tells the tale of past 
operation in a way that can be generally understood and appreciated. Then it accu- 
mulates the past claims to the date of the valuation which are justly and equitably an 
offset to the accumulated contributions. This is readily understood upon the mere 
suggestion that past operation consists in collecting money in the way of contributions 
and paying out money in the way of claims. Therefore, if surviving members at the 
date of valuation are given credit to the full value of past contributions they should 
be charged with the full value of their share of past claims. It is then plain that 
if their accumulated contributions exceed the amount of their accumulated share of 
past claims they should have a net surplus to their credit. On the other hand, if the 
accumulated claims exceed the amount of accumulated contributions a deficiency has 
been created; and then it is not difficult to understand that if all claims from con- 
tributions received have been paid to the date of the valuation, that the excess in 
contributions of some members has been appropriated to make good the deficiencies 
created by other members. From an examination of the valuation sheet on the 
"Accumulation Basis" one can place the finger upon the group of members, by ages 
and years of entry, who have paid more and who have paid less than cost of protection. 
The present status of each member is disclosed as developed from past operation. We 
must judge the future by the past, and our judgment is obviously strengthened by 
having laid before us the present position as brought about by past operation. We 



292 



are better equipped to forecast the future after studying the results of a Retrospective 
Valuation, and certainly better informed for formulating a plan of readjustment for 
future operation. 

If contribution rates are adequate to provide for the benefits promised it is imma- 
terial as to the choice of methods for valuation. If net reserves are at hand, the 
Net Reserve method involves the least work and time. 

However, the majority of subscribers to this book are officials of fraternal bene- 
ficiary societies, and I am trying to present the case primarily for their benefit. Be- 
cause of this, I make two more examples. The same amounts of protection and the 
same assumptions a,s to mortality and interest, and the same annual contribution rates, 
$7.20, $7.80, $8.00, $8.20 and $8.40 are employed, but the ages of entry will be taken in 
the first example as 38, 39, 40, 41 and 42, and as 48, 49, 50, 51 and 52. I will repeat the 
examples given for 18, 19, 20, 21 and 22. The "Tabular" and "Accumulation Basis" 
'methods will be illustrated : 

Prospective Valuation. 



Attained 


Amount of 


Present Value 


Amount of 


Present Value 
of Future Con- 
tributions. 


Required 


Age. 


Protection. 


of Protection. 


1 Assessment. 


Accumulation. 


18 


$ 79500 


$16842.87 


$ 572.40 


$11728.48 


$ 5114.39 


19 


168500 


35698.41 


1268.70 


25995.66 


9702.75 


20 


256500 


54342.09 


1973.90 


40445.21 


13896.88 


21 


317000 


68605.14 


2478.10 


50478.90 


18126.24 


22 


359000 


79396.44 


2852.00 


57753.00 


21643.44 


23 


325500 


73589.04 


2600.30 


52318.04 


21271.00 


24 


258000 


59647.02 


2089.60 


41771.10 


17875.92 


25 


184000 


43517.84 


1507.60 


29925.86 


13591.98 


26 


121000 


29285.63 


1005.00 


19808.55 


9477.08 


27 


44000 


10901.00 


369.60 


7229.38 


3671.62 




$2113000 


$471825.48 


$16717.20 


$337454 18 


$134371.30 


38 


$ 79500 


$ 25909.05 


$ 572.40 


$ 10034.17 


$ 15874.88 


39 


168500 


56359.88 


1268.70 


21948.51 


34411.37 


40 


256500 


88059.02 


1973.90 


33694.47 


54364.55 


41 


317000 


111710.80 


2478.10 


41731.20 


69979.60 


42 


359000 


129864.66 


2852.00 


47314.68 


82549.98 


43 


325500 


120867.92 


2600.30 


42514.91 


78353.01 


44 


258000 


98339.28 


2089.60 


33621.66 


64717.62 


45 


184000 


71990.00 


1507.60 


23865.31 


48124.69 


46 


121000 


48592.39 


1005.00 


15637.80 


32954.59 


47 


44000 


18136.36 


369.60 


5647.49 


12488.87 




2113000 


769829.36 


16717.20 


276010.20 


493819.16 


48 


$ 79500 


$ 33632.48 


$ 572.40 


$ 8586.00 


$ 25046.48 


49 


168500 


73157.65 


1268.70 


18662.58 


54495.07 


50 


256500 


114278.45 


1973.90 


28463.64 


85814.81 


51 


317000 


144913.3S 


2478.10 


34965.99 


109947.39 


52 


359000 


168360.23 


2852.00 


39386.12 


128974.11 


53 


325500 


156578.52 


2600.30 


35078.05 


121500.47 


54 


258000 


1 27^73. 9<S 


2089.60 


27520.03 


99753.95 


55 


184000 


93065.36 


1507.60 


19372.66 


73692.70 


56 


121000 


62733.66 


1005.00 


12582.60 


50151.06 


57 


44000 


23377.20 


369.60 


4505.42 


18871.78 




$2113000 


$997370.91 


$16717.20 


$229123.09 


$768247.82 



293 



Retrospective Valuation. 
Accumulated Contributions. 



Entry 
Ages. 


■ 1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


IS 
19 
20 
21 
22 


S59S.16 
753.97 

735.08 
076.95 
605.08 


$1160.91 
1576.92 

1385.42 
1157.09 
1293.00 


$1747.58 
2213.02 
2387.84 
1936.51 
1681.18 


$2271.00 
2052.19 
3042.32 
2715.43 
2443.35 


$2348.72 
2254.29 
2518.12 
2252.57 
3077.22 


$2327.67 
3727.65 
3991.90 
3285.35 

2598.29 


$10463.04 
13177.04 
14061.28 

12023.90 
11698.78 


Total? . . 


$3370.44 


$6581.40 


$9966.13 


$13124.29 


$12450.92 


$15930.86 


$61424.04 



Accumulated Claims. 



Entry 
Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


18 
19 
20 
21 
22 


$ 399.89 
465.28 
442.64 
399.74 
351.90 


$ 783.56 
974.30 
835.11 
685.74 
753.12 


$1175.12 

1373.62 

1445.08 

1151.28 

983.32 


$1531.97 
1651.48 
1847.05 
1620.60 
1435.20 


$1590.30 
1408.95 
1534.50 
1349.76 
1815.68 


$1578.26 
2333.08 
2436.01 
1977.33 
1540.44 


$7059.10 
8206.71 
8540.39 
7184.45 
6879.66 


Totals . . 


$2059.45 


$4031.83 


$6128.42 


$8086.30 


$7699.19 


$9865.12 


$37870.31 



Accumulated Contributions. 



Entry 

Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


38 
39 
40 
41 
42 


$ 601.02 

757.58 
739.20 
680.19 
608.58 


$1171.01 
1577.39 
1393.20 
1163.58 
1300.32 


$ 1752.91 
2219.76 
2402.40 
1948.32 
1690.92 


$ 2284.20 
2667.60 
3066.80 
2736.67 
2462.46 


$ 2363.90 
2272. SO 
2538.80 
2275.01 
3112.70 


$ 2348.21 
3765.84 
4038.48 
3327.89 
2635.25 


$10521.25 
13260.97 
14178.88 
12131.66 
11810.23 


Totals . . 


$3386.57 


$6605.50 


$10014.31 


$13217.73 


$12563.21 


$16115.67 


$61902.99 



Accumulated Claims. 



Entry 

Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


38 
39 
40 
41 
42 


$ 535.83 

644.73 

" 635.36 

592.50 

540.27 


$1066.28 
1372.14 
1220.67 
1035.54 
1180.08 


$1622.08 
1965.28 
2149.42 
1773.36 
1570.14 


$2148.14 
2404.64 
2800.75 
2544. 86 
2336.75 


$2206.89 
2088.68 
2371.05 
2161.44 
3015. OS 


$2294.02 
3531.24 
3846.78 
3229.05 
2010.96 


$ 9933.24 
12006.71 
13024.03 
11336.75 
11253.88 


Totals . . 


$2948.69 


$5874.71 


$9080.28 


$12235.14 


$11903.74 


$15512.05 


$57554.61 



294 
Accumulated Contributions. 






Entry 

Ages. 



1913. 



1912. 



1911. 



1910. 



1909. 



1908. 



Totals. 



48 
49 
50 
51 
52 

Totals 



$ 601.48 
758.59 
740.61 
682.00 
610.67 



$1179.87 
1590.74 
1399.94 
1170.51 
1309.69 



$1769.11 
2243.31 
2424.02 
1969.10 
1712.03 



$2308.82 
2701 . 15 
3104.68 
2776.60 
2504.39 



$2399.12 
2308.02 

2584.82 
2318.78 
3177.16 



$2390.90 
3840.15 
4125.67 
3407.25 
2705.14 



$10649.30 
13441.96 
14379.74 
12324.24 
12019.08 



$3393.35 



$6650.75 



$10117.57 



$13395.64 



$12787.90 



$16469.11 



$62814.32 



Accumulated Claims. 



Entry 

Ages. 


1913. 


1912. 


1911. 


1910. 


1909. 


1908. 


Totals. 


48 
49 
50 
51 
52 


$ 806.13 

1011.95 

1019.04 

971.70 

901.83 


$1660.60 
2182.01 
1982.88 
1717.32 
2042.64 


$ 2557.44 
3165.90 
3536.26 
2979.36 
2693.15 


$ 3431.94 
3923.88 
4668.20 
4334.18 
4069.65 


$ 3668.52 
3453.70 
4007.30 
3736.32 
5336.32 


$ 3763.26 
5921.44 
6599.45 
5670.93 

4697.88 


$15887.89 
19658.88 
21813.13 
19409.81 
19741.47 


Totals . . 


$4710.65 


$9585.45 


$14932.11 


$20427.85 


$20202.16 


$26652.96 


$96511.18 



Note the fact of the same amounts of protection and the same amounts for one 
assessment in the three age-groups of the "Tabular" Valuation, and then observe how 
the value of protection increases and the value of future contributions decreases with 
the advance in age. 

The value of $79,500 of protection at age 18 is $16,842.87, and the^value of future 
contributions $11,72848. At age 48 the value of $79,500 is $33,632.48, and the future 
contributions $8,586. The required accumulation at age 18 is $5,114.39, and at age 
48 is $25,046.48. For the age-group 18-27 it is $134,371.30, while for 48-57 it is 
$768,247.82. 

There can be no better illustration than this of the increase in cost of protection 
with increase in age. 

The striking feature of the Prospective Valuation is the increased differences, 
with increased attained ages, between the present values of future expected claims 
and the present values of the future expected contributions. 

Remember that in the Prospective Valuation we bring all expected liabilities and 
assets to the present age. We ignore the results of past operation. We have regard 
only for anticipated results in an attempt to forecast the future. Observe that the 
greater the value of expected future claims the smaller the value of the expected 
future contributions, and that the latter decrease with the advance in age. 

Now turn to the study of the valuation on the "Accumulation Basis." 

The striking feature of this valuation is the increase in the value of accumulated 
contributions with advance in age, notwithstanding the same rate for corresponding 
ages of each group. 

The total for entry age 18 and all years of issue is $10,463.04; for entry age 38 
the total is $10,521.25; and for age 48 it is $10,649.30. 

For the year 1913 and the groups of ages 18-22, 38-42 and 48-52, the respective 
totals are $3,3/0.44, $3,386.57 and $3,393-35- 



295 



Why should the present value of future contributions decrease with the increase 
in age, while the accumulated value of past contributions increase with the increase 
in age? 

The answer to this question can be found in previous pages to which reference 
is directed — especially where I dwell at some length on "Mortuary Accretions" and 
their potency at advanced ages. 

There can be no surprise by the exhibit of increase with age in accumulated claims. 
Nor in the fact that the accumulated claims exceed the accumulated contributions at 
the advanced ages. 

Note the Summary : 



Entry Ages. 


Accumulated 
Contributions. 


Accumulated 
Claims. 


Differences 


18-22 
38-42 
48-52 


$61,424.04 
61,902.99 
62,814.32 


$37,870.31 
57,554.61 
96,511.18 


$23,553.73 

4,348.38 

33,696.86 



The summary indicates the most important of all the lessons in insurance that 
may be learned from the study of the valuation by th e Accumulation method. 

Here is clearly demonstrated the need for extra assessments or the readjustment 
of rates of contribution which has come to every Society fifteen years in operation. 

The accumulated past contributions for the age group 18-22 exceed the accumu- 
lated past claims by $23,553.73. 

The accumulated past claims for the age group 48-52 exceed the accumulated past 
contributions by $33,696.86. 

The excess of contributions and increment on $2,113,000 of protection at the 
young ages 18-22 lacks $10,143.13 of being sufficient to make good the deficiencies in 
contributions on $2,113,000 of protection at ages 48-52. 

This disclosure by a valuation, which exhibits the present situation as developed 
through past operation, discovers to any average intellect the cause of failure where 
an insurance business is run upon the principle of appropriating from the young for 
the benefit of the old. The ever-increasing demands of the latter eventually over- 
burden the former and drive them away and others cannot be found to take their 
places. 

The Retrospective Valuation, taken alone, gives more valuable information. Taken 
with the Prospective Valuation complete information is given. 

The valuation laws recently enacted allow the option of either method. 

Probably this opinion of the privileges granted should be modified by stating 
that the Commissioners of three States construe the valuation provisions of the laws 
following the "Mobile Bill" to require either the "Net Reserve" or the (so-called) 
"Tabular" valuation, and as excluding the valuation on the "Accumulation Basis." 

Without stretching to any dangerous degree the power of discretion granted to 
every Insurance Commissioner, the provisions of th e Mobile Bill will allow a valua- 
tion on the "Accumulation Basis." The provision is express that "the valuation may 
show the net value of the certificates subject to valuation." 

Certainly the difference between the accumulated past contributions and accu- 
mulated past claims is the "net value" of the certificates. 

No Commissioner will controvert that statement, but it is contended that "net 
value" has been known as the "difference between the present value of future claims 



296 

and the present value of future contributions," and so hoary with age is this definition 
that it would be unpardonable disrespect to accept any other. 

The superiority of the accumulation method in respect of information concerning 
fraternal Society conditions should commend it to every Commissioner of Insurance 
even to the extent of accepting as "net value" the difference between the present 
value of past contributions and the present value of past claims. 

The acceptance of a valuation on the "accumulation basis" does not necessarily 
carry with it an acceptance of all of the provisions of Section 23b of the "New York 
Conference Bill." 

The valuation may be made on the "Accumulation Basis" without following it 
with an "apportionment" o£ accumulated funds. 

To make an apportionment of the accumulated funds is to make a readjustment 
of the relations between members. 

A valuation followed by readjustment was no doubt contemplated by the author 
of Section 23b. However, the provisions of the Bill permit a valuation on the 
"Accumulation Basis" without a readjustment. 

I am not saying that valuation and readjustment is less desirable — as a fact, it is 
preferable to valuation without apportionment and readjustment. 

The point is that the merits of a Retrospective Valuation should cause its adop- 
tion as the best method for fraternal societies (in their present condition), and 
without reference to its peculiar adaptability to an apportionment of accumulated 
funds and the establishing of equitable relations between members in respect of con- 
tributing according to insurance risk. 



SECTION 23B. 

The Mobile Bill, as hereinbefore stated, provides for valuations by the "Net Re- 
serve," or the (so-called) "Tabular" methods. At a conference in New York, De- 
cember 4, 1912, amendments were agreed to, and the Bill, as amended, is given (in 
substance) at pages 66-72. 

At a second conference in New York, December 15, 1913, additional amendments 
were agreed to as follows, in respect of Section 23b : 

First. That the first paragraph of Section 23b of said conference bill be amended 
by inserting after the words "to cover his share of the losses" in the third line from 
the end in the printed copy, the following words, first changing the period to a comma : 
"and if the credit at the time any benefit becomes payable during the lifetime of the 
member, including any available funds, does not equal such benefit, the contributions 
;o be made by him or on his behalf shall be increased by the difference." 

Second. By striking out the sixth and seventh paragraphs of said bill as printed, 
and substituting therefor the following: 

"A table showing the rates being paid by and the credits to indi- 
vidual members at each age and year of entry, and showing opposite 
each credit the tabular rate and the tabular reserve on a level rate 
equivalent to that being paid, according to assumptions for mortality 
and interest recognized by the laws of this State and adopted by the 
Society, and, in either case, including any benefit payable at a specified 
age or on account of old age disability, shall be filed by the Society 
with each annual report and also be furnished to each member before 
July 1st of each year." 

"In lieu of the aforesaid statement there may be furnished to each 
member within the same time a statement giving the data aforesaid for 
such member. No table or statement need be made or furnished when 
the reserves are maintained on the tabular basis." 



297 

The amendments so recommended are for the purpose of making the section more 
specific and definite, and to prevent misunderstandings which have arisen with regard 
to the purpose and intent of the section. 

The Committee on Fraternal Insurance for the Insurance Commissioners' Con- 
vention reported (and the recommendation was adopted, subject to such changes and 
corrections as might be made by the Committee on Statutory Legislation for the 
National Fraternal Congress) the following form of valuations under Section 23b: 

TABLE OF CREDITS 



As of December 31, 191 . 



For the . 



(Name of Society.) 

for certificates of $1,000.00 on the plan. 

Year of Issue. 





1913. 


1912. 


1911. 


Etc. 


Age. 


Present 

Rate and 

Credit . 


Required 
Rate and 
Reserve. 


Present 

Rate and 

Credit. 


Required 
Rate and 
Reserve. 


Present 

Rate and 

Credit. 


Required 
Rate and 
Reserve. 


Etc. 


16 
















17 
















18 
















Etc. 

















The valuer must state whether or not account has been taken of contributions 
or reserves made, or held, or required to be made or held for sickness, accident, or 
other benefits than mentioned in the body of the report. 

He must state whether or not the credits and reserves have been calculated to the 
last anniversary of the certificates, or must specify the time to which they have 
been calculated. 

The Committee added the following explanatory statements and notes : 

"Any member may find the figures for his certificate by following down the col- 
umns for his year of entry to the horizontal lines for his age at entry. 

"The table shows the ^monthly) rates being paid by, and the present credits to, 
members holdings certificates on the ( 2 whole life plan) at each age and year of 
entry; and for purposes of comparison shows opposite such rate and credit ( 3 the 
tabular entry age, monthly rate required to be paid and the tabular reserve now 

required), assuming a death rate equal to the — table of mortality and interest 

at the rate of per cent in order to provide the death benefit (*four or "five) 

promised in the contract upon a certificate for $1,000. The credit of the member is 
the balance from contributions made by him, or in his behalf, and his share of 
interest earnings after deducting his cost of insurance for his share of the actual 
death claims. 

"If the credit and contribution made by or on behalf of a member shall together 
be insufficient to pay his share of the actual death claims for any year, the contri- 
bution to be made by him or on his behalf for said year shall be increased by the 
difference." 

Note 1. In the proper case, substitute the word "quarterly" or "annual" for 
"monthly." 

Note 2. In the proper case, substitute for the words "whole life," the words 
descriptive of the plan covered by this table. 

Note 3. The Society may, at its option, substitute for the words included in the 
parenthesis the following words : "The reserve that should be in hand if the present 
rate is not to be increased." 



298 

Note 4. According to the facts, add "and the benefit payable at age ." 

Note 5. According to the facts, add "and the benefit payable on account of 
old age disability." 

Note 6. Where Note 4 or 5 applies, add to the paragraph above which begins: 
"If the credit and contribution" the following words, "and if the credit at the 
time any benefit becomes payable during the lifetime of the member, including any 
available funds, does not equal such benefit, the contribution to be made by him or 
on his behalf shall be increased by the difference." 

The committee further recommends that the reports to the several insurance 
departments made by the societies which elect to value under Section 23b contain a 
similar table to the above, showing for each age and year of issue the number of 
members, the amount of insurance, the total credits and the total reserves, and that 
there shall be appended to said table the following: 

"The total credits for all certificates outstanding upon this plan as above are 
$ , and adjusted to December 31, 19 , such credits are $ . 

"The total required reserves for all certificates outstanding upon this plan as above 
are $ , and adjusted to December 31, 19 , such reserves are $ . 

It appears that Section 23b offers a fairly satisfactory solution of the problem 
as to the best method of dealing with — 

1. The membership of a society in oppostion to the acceptance of theoretically 
adequate contribution rates, provided existing rates are not too low. 

2. The membership of a society on readjusted rates assumed to be adequate but 
not equal to theoretically adequate contributions. 

3. The membership of a society to which rates adequate only for attained ages 
had been applied as of original ages at entry, or at younger than attained ages at 
date of rerating. 

4. The membership of a society placed to itself in a designated inadquate rate class. 

5. The membership of a society thrown together in one class, with entrants prior 
to a given date contributing at inadequate rates, and with entrants subsequently to the 
given date contributing at adequate rates. 

Generally speaking, these five groups will cover the character of business to which 
Section 23b is applicable — and then only when all new members, admitted after the 
date of its application, are placed upon theoretically adequate contribution rates with 
required reserve accumulation set aside to maintain their adequacy. 

The one exception to this requirement might be in the second case of a read- 
justment upon rates assumed adequate by officials or members, but lower than the 
theoretically adequate rates, and where it is desired that a test be made in practical 
and continued operation as to the adequacy of the assumption. Even in this instance, 
it would be much better, for all concerned, present and future members alike, to 
have the new entrants contribute at theoretically adequate rates. The latter never 
yet have failed to produce income sufficient to provide for promised benefits (assum- 
ing wise and honest management), while estimated adequacy time and again has 
miscarried. 

This opinion of the remedy offered by Commissioner Ekern was submitted to a 
man who is recognized as one that can speak with authority on such matters, and 
he writes to me as follows : 

"A second matter that you have referred to in no uncertain terms, but which 
I should be glad to see with even a little more emphasis, is that 23b is absolutely 
useless to a society, unless it puts its new business on adequate tabular rates. In fact, 
to my mind, a second condition of an institution which adopts the concessions of 23b 
and does not accompany it with adequate tabular rates as far as new business is con- 
cerned is worse than the first ; for in the first place it might be innocently guilty of 
the deception of the public implied in its operation. In the second place, it is enter- 



299 

ing willfully upon a course of deceit. I have been much disappointed that Mr. Ekern 
has not been prepared to adopt this view, but with all the respect I have for him, I 
cannot feel that he is right in counseling that the issue be not raised at this time. 
It seems to me that now is the time that no society ought to be allowed to put 
in force the methods of 23b under the assumption that through the remedy it pre- 
scribes it may still continue safely to write new members under old conditions, with 
the expectation of applying the remedy to them when the time comes. Aside from 
this, such a course is needless, because if a society desires to write purely current 
cost business, it can do so under the law on the step-rate plan, and have the con- 
sciousness that it is doing what it is doing honestly." 

Commissioner Ekern declares that a valuation under Section 23b has the striking- 
advantage over other methods in that the results of a valuation as provided in the 
section will show 100 per cent or more of solvency — and cannot disclose any technical 
deficiency, because of offsetting charges and the required increase of contribution or 
other recourse to provide for the member's share of losses in excess of his credit and 
current net contribution. To render this statement altogether correct demands a 
construction that will change certificates to yearly renewable contracts promising death 
benefit only, or a construction of the provisions of the section which will explain the 
procedure in the determination of "cost of insurance" and the "charge" to be entered 
where a member is within one or more years of maturing a promised endowment or 
other benefit of a character as hereinafter suggested. 

It is my opinion that Commissioners have the authority, under discretionary 
powers, to prescribe the methods of procedure in the valuation of other than death 
benefits. As the section stands it is not applicable to such cases, and I agree with 
as Actuary who has expressed himself on this point to the effect that "the added cost 
involved by these extra benefits must be provided for by accumulation functions deter- 
mined actuarily." Valuation by the employment of such factors could be accepted 
by Commissioners through a proper exercise of discretionary powers. 

In effect, this has been done by the Commissioners in their action at the recent 
conference, December 12, 1913. 

Very many societies promise to pay the face of certificates by installments in the 
event of permanent total disability, or on attaining to 70 years of age. Upon the 
date of any valuation there will be matured obligations under both of these promises, 
and there will be members in such physical condition or so near the endowment 
age that claims will mature shortly, and on all such certificates the insurance liability 
is greater than where the promise is for death benefit only. 

Unless the courts decide against the segregation of funds under the provisions 
of Section 23b, valuation under it can be made to serve the purpose hereinbefore 
indicated. 

The method of valuation best suited for the individual society can be determined 
only by knowing the individual condition. 

Section 23a of the "Mobile and of the New York Conference Bills" provides for 
the valuation of "Promised Benefits" and of "Future Net Contributions as in practice 
actually collected," and provides also for an exhibit merely of the "Net Value of 
Certificates." 

Section 23b of the New York Conference Bill provides : "In lieu of the require- 
ments of Sections 22, and 23a any society, accepting in its lazus the provisions of this 
section, may value its certificates on a basis, herein designated Accumulation Basis, 
by crediting each member with the net amount contributed for each year and with 
interest at approximately the net rate earned, and by charging him with his share 



300 

of the losses for each year, herein designated Cost of Insurance, and carrying the 
balance, if any, to his credit." 

The section further provides: "Certificates issued, rerated or readjusted on a 
basis providing for adequate rates, with adequate reserves to mature such certificates 
upon assumptions for mortality and interest recognized by the laws of this State, 
shall be valued on such basis, herein designated Tabular Basis." 

In order to take advantage of the "Accumulation Basis" of valuation each society 
must "accept the provisions in its laws." This is a condition precedent and must 
be complied with prior to making the valuation. 

It is understood that some, and probably all, of the Commissioners of the eleven 
States in which the "Mobile Bill" is effective will accept valuations made on the 
"Accumulation Basis," although there is no specific provision for it in that bill. This 
acceptance is permissible under the general discretionary power given to the Com- 
missioners. 

By whatever method the valuation is made, a society may employ a Table of Mor- 
tality based upon its own experience "of at least twenty years and covering not less 
than one hundred thousand lives, with interest assumption not more than 4 per centum 
per annum." 

A question has been raised as to the intent of the quoted words in reference to 
"one hundred thousand lives." The original wording in the amendment offered by 
the Royal Arcanum in the National Fraternal Congress was "one hundred thousand 
members." I pointed out to the representative of that society that such wording 
would operate to exclude the Royal Arcanum from the benefit of the proposed amend- 
ment to Section 23 of the tentative bill then under consideration. I suggested as 
a substitute for "members" the words "lives exposed to risk." The learned attorneys 
who had charge of the bill adopted the suggestion by substituting "lives" for "mem- 
bers," but omitted the words "exposed to risk," which would have made clear the 
intent of Brother Wiggins in offering the original amendment. However, the use 
of the word "lives" instead of "members," and the unquestioned purpose of the 
provision, leaves no doubt that the meaning of the provision is that any society can 
employ a Table of Mortality based upon its own Experience, ivhen that experience 
covers a period of at least twenty years and includes a total of not less than one hun- 
dred thousand lives exposed to risk during that period. 

MATERNITY BENEFITS. 

Only one American Society has established a scale of contributions for maternity 
Benefits. 

It is very common in Europe for societies to pay a stipulated benefit on the birth 
of a child. 

Concerning this benefit Mr. Alfred W. Watson writes : 

Amongst the minor allowances of friendly societies, maternity benefits have almost 
always been found in village friendly societies of women, and these benefits have re- 
cently come more frequently under notice because of the establishment of branches 
of women members of affiliated orders during the last twenty years. There has been 
a considerable misunderstanding of the financial incidence of this particular benefit 
in the establishment of the branches of some of the affiliated orders. An attempt 
has been made to set up separate funds for maternity benefits on the theory that, if 
separate funds for sickness and death benefits were required (this necessity was as- 
sured on grounds which I have explained previously), a separate fund for the ma- 
ternity benefit was also needed. But, of course, the societies which attempted to set 
up such funds failed to observe that while benefits depending on sickness and mortality 
were increasing risks provided for by a level premium, maternity benefit repre- 



301 

sented a decreasing risk with the like form of premium, and that consequently, the 
reserves, after about 30 years of age, must be negative. Several societies have tried 
to set up such a fund, and naturally, have found it nearly always in a state of in- 
solvency. I do not suppose that any qualified adviser would undertake to quote a pre- 
mium for maternity benefit to be paid into a separate fund for that benefit; but the 
point is worth mentioning, if only to indicate the problems which are submitted to the 
actuary, with excellent intentions, by friendly society managers who, of necessity, are 
imperfectly versed in the technical principles involved. The same may be said of the 
request occasionally advanced, that the actuary will quote a premium payable through- 
out life for an optional maternity benefit ; this, obviously, is an impossible form of 
contract. 

The maternity benefit is very easily valued as a variable annuity, ceasing at about 
45 years of age in the case of societies of women, but assuming it to run on to age 55, 
or later, in the case of societies of men. The only collected experience in this country 
of maternity benefit claims is that of the Heart of Oaks Society, three recent years' 
experience of which I was enabled to obtain and analyze some time ago. I am in- 
clined to think that the birth rate of the country generally is rather higher than it is 
among the members of the Hearts of Oak Society, but having in view the constant 
decrease in this rate, it is scarcely safe to put forward any positive opinion. 

On the point last mentioned it is, perhaps, worth referring to the fact that I have 
recently had under examination a fairly large experience, obtained from a centralized 
society's records referring to the years 1876 to 1880, and tabulated by Mr. R. P. Hardy. 
This society showed at the age of 27, which is a typical age for this purpose, a birth 
rate of 30 per cent ; that is to say, 30 per cent of the entire membership at age 27 
had children born to them within a year. In the Hearts of Oak experience, in the 
three years 1907 to 1909, the corresponding proportion was only 17 per cent. The 
society giving the 1876-80 experience has been recently through my hands, and I found 
its experience to be about one-third higher than the Hearts of Oak, which would 
make the present birth rate in respect of its members about 23 per cent at the age 
of 27. So far, therefore, as somewhat inperfect statistics show, it would seem that 
in the case of that society the birth rate has fallen during the last 30 years by about 
25 per cent. 

BENEFIT FOR MEMBER'S WIFE. 

Quoting further from Mr. Watson : 

There appears to be scope for consideration with regard to the method employed to 
value the benefit payable on the death of a member's wife during his lifetime. Hitherto 
it has been the orthodox custom to value this benefit by the ordinary function A^y 
the female life (x) being generally taken as two to five years younger than the male 
life (y). The employment of this function somewhat overestimates the claims, in 
consequence of ignoring the unmarried condition of a substantial proportion of the 
membership, and assuming that on the valuation date the society is on the risk for 
everybody except widowers. The opposite and extremely unreasonable course has 
been taken by many "valuers" of assuming that the men who on the valuation date 
were not married, never would be married, and, consequently, of debiting the society 
with no liability in respect of the wife's death benefit for these members. I think a 
middle course might be found, and the claims in respect of the wives recorded at each 
age of the member, in order that a rate of claim in respect of wife's death might be 
obtained (precisely as one would get out the rate of claim in respect of maternity or 
sickness) and the benefit be valued on that basis. To test the possibility of adopting 
this course I have analyzed the Hearts of Oak experience for the three years T907 to 
1909, and have found that the claims for wife's death benefit per thousand members 
at risk emerge on something like the following scale : 2 at age 26 ; 3 at age 30 ; 5 at 
age 40; 8 at age 50; 14 at age 60, and 25 at age 70. This gives a very good series, 
and naturally produces a value substantially lower than the text-book factor for the 
benefit. After full consideration, I am of opinion that this method would supply a 
legitimate way of valuing this particular benefit in a well established society. It is 
clear, however, that in the case of any recently established society, the society's own 
experience should not be used, because, in such cases, there is a tendency to recruit 
the membership from amongst young and unmarried men ; but on the principle the 
plan seems sound. 



302 



LAPSE ELEMENT IN VALUATION. 






Mr. Alfred W. Watson, an authority on Friendly Societies, makes the following 
comment on the consideration of the lapse element in the valuation. His statements 
are applicable to the valuations of the certificates of Fraternal Beneficiary Societies. 
Only the actuary of a Canadian Order has undertaken to introduce the lapse element 
into the valuation of American Societies. 

On general principles it is a custom — and a sound one— to deprecate any use of the 
secession element in valuing friendy societies. Personally, I would say nothing to 
weaken the general opinion on this point. My observations now are simply directed 
to matters that should be taken into consideration before, and in case the actuary does 
decide to employ the secession element in a particular valuation. Broadly, I would 
lay down the rule that in small societies the probability of secession should be ignored ; 
in large societies there is more ground for its recognition. But while I would admit 
in the case of a large society, the use of the secession rate, as giving some abatement 
of liabilities in a case where there is reason to expect a deficiency, and where the basis 
in other respects is adequate, I think it would be distinctly undesirable to use a rate 
of secession in the case of a society, however large, where the expected outcome of 
the valuation was a distribution of surplus. Not only can it be urged in such a case, 
that the use of a secession rate represents a present anticipation of possible future 
profit, but the direct result of that course of action may be to so enlarge the amount 
of present surplus as to afford the members strong inducement to remain in the society, 
thus weakening one of the pillars on which the surplus depends. In dealing with 
societies of recognized soundness, and especially if there is any question of the appro- 
priation of the surplus, my own course has always been to disregard the secession 
element, except in regard to the large collecting societies which are outside the scope 
of our syllabus. 

The employment of a secession rate for large societies and its disregard in the 
case of small bodies appears to set up a discrimination in favor of large societies, as 
regards the leniency of the test of valuation. Scientifically this is not difficult to de- 
fend if the true ground for the differentiation be kept in view. This is not that seces- 
sions will be fewer relatively in the small societies than they will be in the large 
societies, but that the uncertainty of estimating them is greater. Secession, being an 
event dependent upon the action of the human will, is always difficult of measurement ; 
when the actuary comes to deal with very small bodies, such as village friendly societies, 
he may say, with confidence, that if he could take a thousand societies and pool them 
he would find probably amongst them as he would find in one large society with pre- 
cisely the same type of members. But in the practical conditions each society must be 
regarded separately, and it is the uncertainty of the secession element which debars 
the actuary from giving effect to it when appraising the position of a small body. 

GENERAL COMMENTS. 

Fraternal beneficiary societies reserve the right to expel members for certain in- 
fractions of the constitution and laws, and for certain offenses and crimes. The cases 
of expulsion are comparatively few and may be ignored in forecasting future results. 

The society is virtually in the position of the life company in respect of voiding 
or cancelling its contract. It has the right to levy extra assessments, but so long as 
the member keeps up his contributions the society must abide the contractural condi- 
tions. 

However, the constitution and laws being part of the contract, in very many cases, 
it is not an easy matter to reduce the benefits and payments to a working formula. 

The policy of a life company contains all of the provisions and conditions of the 
contract, where the application is incorporated in the policy, as is done almost uni- 
versally. 

One must read the entire constitution and laws of the fraternal beneficiary society 
to be sure of contract conditions, and in some instances he cannot then be certain of 



303 

the ''Benefit Side" and "Payment Side" of the contract. The learned actuaries who 
have written text-books have not evolved symbols sufficient to express algebraically 
all of the features of either side to the contract. 

It has been the practice of societies to have paramount regard to safety of the 
principal invested, and it is difficult to impress officials with the necessity of earning 
4 per cent or more when they adopt contribution rates calculated upon four per cent 
interest assumption. 

I have commented upon the importance of the expense consideration. 

The valuation laws require that the "net" contributions be valued. 

Some societies "load" the net premium, or contribution rate, to continue through 
the period of protection and to replace by monthly payments an amount used in the 
first year for expenses. 

This practice may be considered in the nature of preliminary term insurance and 
treated similarly in making a valuation. 

Or the present value of the loading may be treated as a single premium for the 
purchase of the cash sum for immediate use, and the amount of this single premium 
added to the single premium for the valuation of the protection. The loaded contribu- 
tion rate then may be treated as the "net" rate of contribution. Obviously the present 
value of the loading to be added to the insurance single premiums will decrease from 
year to year, being valued by the annuity at the attained age which is employed in the 
valuation of the contributions. 

If the valuation is by "Net Reserves," these must be modified for a valuation where 
the net premium is loaded for a flat amount for expenses in the first year. 

The valuation laws for fraternal societies provide that the protection for the current 
year need not be valued where the whole or any part of the first year's contributions 
are used for expenses. 



304 



TABLE I. 
NATIONAL FRATERNAL CONGRESS TABLE OF MORTALITY. 





lx 


d x 


q x 


1000 q x 


1000 q x v x 


e x 


Average 


X 

Age. 


Number 


Number 


Yearly Proba- 


Yearly Death 


Discounted 


Expecta- 


Duration 


Living. 


Dying. 


bility of Dying. 


Rate Per 1,000. 


Yearly Rate 
Per 1,000. 


tion of Life. 


of Life. 


20 


100000 


500 


.0050000 


5.000 


4.808 


45.6 


49.7 


21 


99500 


501 


.0050352 


5.035 


4.841 


44.9 


48.8 


22 


98999 


502 


.0050708 


5.071 


4.876 


44.1 


47.9 


23 


98497 


503 


.0051068 


5.107 


4.911 


43.3 


47.0 


24 


97994 


505 


.0051535 


5.154 


4.956 


42.5 


46.1 


25 


97489 


507 


.0052006 


5.201 


5.001 


41.8 


45.2 


26 


96982 


510 


.0052587 


5.259 


5.057 


41.0 


44.3 


27 


96472 


513 


.0053176 


5.318 


5.113 


40.2 


43.4 


28 


95959 


517 


.0053877' 


5.388 


5.181 


39.4 


42.5 


29 


95442 


522 


.0054693 


5.469 


5.259 


38.6 


41.6 


30 


94920 


527 


.0055520 


5.552 


5.338 


37.8 


40.7 


31 


94393 


533 


.0056466 


5.647 


5.430 


37.0 


39.8 


32 


93860 


540 


.0057532 


5.753 


5.532 


36.2 


38.9 


33 


93320 


548 


.0058723 


5.872 


5.646 


35.4 


38.0 


34 


92772 


557 


.0060040 


6.004 


5.773 


34.6 


37.1 


35 


92215 


567 


.0061487 


6.149 


5.912 


33.9 


36.2 


36 


91648 


578 


.0063067 


6.307 


6.064 


33.1 


35.3 


37 


91070 


591 


.0064895 


6.490 


6.240 


32.3 


34.4 


38 


90479 


606 


.0066977 


6.698 


6.440 


31.5 


33.5 


39 


89873 


622 


.0069209 


6.921 


6.655 


30.7 


32.6 


40 


89251 


640 


.0071708 


7.171 


6.895 


29.9 


31.7 


41 


88611 


660 


.0074483 


7.448 


7.162 


29.1 


30.9 


42 


87951 


683 


.0077657 


7.766 


7.467 


28.3 


30.0 


43 


87268 


708 


.0081129 


8.113 


7.801 


27.5 


29.1 


44 


86560 


734 


.0084797 


8.480 


8.154 


26.8 


28.2 


45 


85826 


761 


.0088668 


8.867 


8.526 


26.0 


27.4 


46 


85065 


790 


.0092870 


9.287 


8.930 


25.2 


26.5 


47 


84275 


822 


.0097538 


9.754 


9.379 


24.4 


25.6 


48 


83453 


857 


.0102693 


10.269 


9.874 


23.7 


24.8 


49 


82596 


894 


.0108238 


10.824 


10.408 


22.9 


23.9 


50 


81702 


935 


.0114440 


11.444 


11.004 


22.2 


23.1 


51 


80767 


981 


.0121460 


12.146 


11.679 


21.4 


22.2 


52 


79786 


1029 


.0128970 


12.897 


12.401 


20.7 


21.4 


53 


78757 


1083 


.0137512 


13.751 


13.222 


19.9 


20.6 


54 


77674 


1140 


.0146767 


14.677 


14.112 


19.2 


19.8 


55 


76534 


1202 


.0157054 


15.705 


15.101 


18.5 


19.0 


56 


75332 


1270 


.0168587 


16.859 


16.211 


17.8 


18.2 


57 


74062 


1342 


.0181200 


18.120 


17.423 


17.1 


17.4 


58 


72720 


1418 


.0194994 


19.499 


18.749 


16.4 


16.6 


59 


71302 


1501 


.0210513 


21.051 


20.241 


15.7 


15.8 


60 


69801 


1588 


.0227504 


22.750 


21.875 


15.0 


15.1 


61 


68213 


1681 


.0246434 


24.643 


23.695 


14.4 


14.4 


62 


66532 


1778 


.0267240 


26.724 


25.690 


13.7 


13.6 


63 


64754 


1880 


.0290330 


29.033 


27.916 


13.1 


12.9 


64 


62874 


19X5 


.0315711 


31.571 


30.357 


12.4 


12.2 


65 


60889 


2094 


.0343904 


34.390 


33.067 


11.8 


11.6 



305 



TABLE I. 
NATIONAL FRATERNAL CONGRESS TABLE OF MORTALITY— Continued. 





lx 


d x 


q* 


1000 q x 


1000q x v x 


e x 


Average 


Age. 


Number 


Number 


Yearly Proba- 


Yearly Death 


Discounted 


Expecta- 


Duration 


Living. 


Dying. 


bility of Dying. 


Rate Per 1,000. 


Yearly Rate 
Per 1,000. 


tion of Life. 


of Life. 


66 


58795 


2206 


.0375202 


37.520 


36.077 


11.2 


10.9 


67 


56589 


2318 


.0409620 


40.962 


39.387 


10.7 


10.3 


68 


54271 


2430 


.0447753 


44.775 


43.053 


10.1 


9.7 


69 


51841 


2539 


.04S9767 


48.977 


47.093 


9.5 


9.1 


70 


49302 


2645 


.0536489 


53.649 


51.586 


9.0 


8.5 


71 


46657 


2744 


.0588122 


58.812 


56.550 


8.5 


7.9 


72 


43913 


2832 


.0644912 


64.491 


62.011 


8.0 


7.4 


73 


41081 


2909 


.0708113 


70.811 


68.087 


7.5 


6.9 


74 


38172 


2969 


.0777795 


77.780 


74.788 


7.0 


6.4 


75 


35203 


3009 


.0854757 


85.476 


82.188 


6.6 


6.0 


76 


32194 


3026 


.0939927 


93.993 


90.377 


6.2 


5.5 


77 


29168 


3016 


.1034010 


103.401 


99.424 


5.7 


5.1 


78 


26152 


2977 


.1138345 


113.835 


109.457 


5.3 


4.7 


79 


23175 


2905 


. 1253506 


125.351 


120.530 


5.0 


4.3 


80 


20270 


2799 


.1380858 


138.086 


132.775 


4.6 


4.0 


81 


17471 


2659 


.1521951 


152.195 


146.341 


4.3 


3.6 


82 


14812 


2485 


.1677694 


167.769 


161.316 


3.9 


3.3 


83 


12327 


2280 


.1849599 


184.960 


177.846 


3.6 


3.0 


84 


10047 


2050 


.2040410 


204.041 


196.193 


3.3 


2.8 


85 


7997 


1800 


.2250844 


225.084 


216.427 


3.0 


2.5 


86 


6197 


1539 


.2483460 


248.346 


238.794 


2.8 


2.3 


87 


4658 


1277 


.2741520 


274.152 


263.608 


2.5 


2.0 


88 


3381 


1023 


.3025732 


302.573 


290.935 


2.3 


1.8 


89 


2358 


788 


.3341815 


334.182 


321.329 


2.1 


1.7 


90 


1570 


579 


.3687898 


368.790 


354.606 


1.9 


1.5 


91 


991 


404 


.4076690 


407.669 


391.989 


1.7 


1.4 


92 


587 


264 


.4497445 


449.745 


432.447 


1.5 


1.2 


93 


323 


161 


.4984520 


498.452 


479.281 


1.4 


1.0 


94 


162 


89 


.5493827 


549.383 


528.253 


1.2 


.9 


95 


73 


44 


.6027397 


602.740 


579.557 


1.1 


.8 


96 


29 


19 


.6551724 


655.172 


629.973 


1.0 


.8 


97 


10 


7 


.7000000 


700.000 


673.077 


.8 


.7 


98 


3 


3 


1.0000000 


1000.000 


961.538 


.5 


.5 



306 

TABLE II. 

FRATERNAL EXPERIENCE— FOUR PER CENT. 

Commutation Columns. 



D x =l x v* 



N X = 2D X 



= SN X 



C x = 

d x v x+1 



M X =2C X 



R X = 2M X 



0.456387 
.438834 
.421955 
.405726 
.390121 

.375117 
.360689 
.346817 
.333477 
.320651 

.308319 
.296460 
.285058 
.274094 
.263552 

.253415 
.243669 
.234297 
.225285 
.216621 

.208289 
.200278 
.192575 
.185168 
. 178046 

.171198 
.164614 
. 158283 
.152195 
. 146341 

.140713 
. 135301 
. 130097 
.125093 
.120282 

.115656 
.111207 
.106930 
.102817 
.098863 

.095060 
.091404 

.087889 
.084508 
.081258 

.078133 



45638.694620 
43663.943411 
41773.161323 
39962.826653 
38229.563757 



36569. 
34980. 
33458. 
32000. 
30603. 

29265. 
27983. 
26755. 

25578. 
24450. 

23368. 
22331 . 
21337. 
20383. 
19468. 

18590. 
17746. 
16937. 
16159. 
15411. 

14693. 
14002. 
13339. 
12701 . 
12087. 

11496. 

10927. 

10379 
9851, 
9342. 



761935 
363189 
088154 
164667 
612321 

607964 
773102 
538255 
468237 
254452 

707633 
751021 
413942 
600485 
343764 

005525 
827439 
157699 
258675 
691911 

274895 
877792 
262351 
109702 
191143 

502098 
822887 
897122 
949610 
763354 



8851.579017 
8377.462587 
7919.451359 
7476.876219 
7049.116582 



935208.44679 
889569.75217 
845905.80876 
804132.64744 
764169.82079 

725940.25703 
689370.49509 
654390.13190 
620932.04375 
588931.87908 

558328.26676 
529062.65880 
501078.88570 
474323.34744 
448744.87920 

424294.62475 
400925.91712 
378594.16610 
357256.75216 
336873.15167 

317404.80791 
298814.80238 
281067.97494 
264130.81724 
247971.55857 

232559.86666 
217866.59176 
203863.71397 
190524.45162 
177823.34192 

165736.15078 
154239.64868 
143311.82579 
132931.92867 
123079.97906 

113737.21570 

104885.63669 

96508.17410 

88588.72274 
81111.84652 



6635 
6234 
5847 
5472 
5109 



.311052 
.956860 

.409949 
.253719 
.017328 



74062. 
67427. 
61192. 
55345 

49872, 



72994 
41889 
46203 
05208 
79836 



4757.423211 



44763.78103 



16198892.4659 
15263684.0191 
14374114.2669 
13528208.4581 
12724075.8107 

11959905.9899 

11233965.7329 

10544595.2578 

9890205.1059 

9269273.0621 

8680341.1830 
8122012.9163 
7592950.2575 
7091871.3718 
6617548.0243 

6168803.1451 
5744508.5204 
5343582.6033 
4964988.4373 
4607731.6850 

4270858.5333 
3953453.7254 
3654638.9231 
3373570.9481 
3109440.1309 

2861468.5723 
2628908.7056 
2411042.1139 
2207178.3999 
2016653.9483 

1838830.6064 
1673094.4556 
1518854.8069 
1375542.9811 
1242611.0525 

1119531.0734 

1005793.8577 

900908.2210 

804400.0469 

715811.3242 

634699.4776 
560636.7477 
493209.3288 
432016.8668 
376671.8147 

326799.0163 



219 
211 
203 
196 
189 



416801 
399649 
674619 
231102 
433985 



9669 
9449 
9238. 
9034, 

8838, 



13897 
72217 
32252 
64791 
41680 



182.869441 
176.876451 
171.073943 
165.776781 
160.942345 

156.234556 
151.935882 
148.010854 
144.426545 
141.152417 

138.160165 
135.423578 
133.143690 
131.272088 
129.555786 

128.177874 
127.099454 
126.469882 
126.056815 
125.659634 

125.271146 
125.043219 
125.104097 
125.414340 
125.797078 



126 
127 
128 
130 
131 



506053 
624885 
720700 
265117 

847285 



133.671083 
135.801129 
137.980857 
140.187475 
142.685662 



145 
147 
150 
152 
155 



149920 
740878 
255847 
765095 
093450 



157.317227 



8648.98282 
8466.11338 
8289.23693 
8118.16298 
7952.38620 

7791.44386 
7635.20930 
7483.27342 
7335.26257 
7190.83602 

7049.68360 
6911.52344 
6776.09986 
6642.95617 
6511.68408 

6382.12830 
6253.95042 
6126.85097 
6000.38109 
5874.32427 

5748.66464 
5623.39349 
5498.35028 
5373.24618 
5247.83184 

5122.03476 
4995.52871 
4867.90382 
4739.18312 
4608.91801 

4477.07072 
4343.39964 
4207.59851 
4069.61765 
3929.43018 

3786.74452 
3641.59460 
3493.85372 
3343.59787 
3190.83278 

3035.73933 



312174.1212 
302504.9822 
293055.2600 
283816.9375 
274782.2896 

265943.8728 
257294.8900 
248828.7766 
240539.5397 
232421.3767 

224468.9905 
216677.5466 
209042.3373 
201559.0639 
194223.8031 

187032.9653 
179983.2817 
173071.7583 
166295.6584 
159652.7022 

153141.0182 
146758.8899 
140504.9394 
134378.0885 
128377.7074 

122503.3831 
116754.7185 
111131.3250 
105632.9747 
100259.7285 

950U.8967 
89889.8619 
84894.3332 
80026.4294 
75287.2463 

70678.3283 
66201.2575 
61857.8579 
57650.2594 
53580.6417 

49651.2116 
45864.4671 
42222.8725 
38729.0187 
35385.4209 

32194.5881 



307 



TABLE II. 
FRATERNAL EXPERIENCE— FOUR PER CENT— Continued. 
Commutation Columns. 



X 


v x 


D x = l x v* 


N X =2D X 


S X = 2N X 


d x v x+1 


M X = 2C X 


R X = SM X 


66 


.075128 


4417.128168 


40006.35782 


282035.2353 


159.357231 


2878.42210 


29158.8488 


67 


.072238 


4087.881392 


35589.22965 


242028.8775 


161.007594 


2719.06487 


26280.4267 


68 


.069460 


3769.647591 


31501.34862 


206439.6478 


162.295270 


2558.05727 


23561.3618 


69 


.066788 


3462.365875 


27731.70067 


174938.2996 


163.053059 


2395.76200 


21003.3045 


70 


.064219 


3166.144898 


24269.33480 


147206.5989 


163.327226 


2232.70894 


18607. 542g 


71 


.061749 


2881.042869 


21103.18990 


122937.2641 


162.923480 


2069.38172 


16374.8336 


72 


.059374 


2607.310048 


18222.14703 


101834.0742 


161.681184 


1906.45824 


14305.4519 


73 


.057091 


2345.347708 


15614.83698 


83611.9272 


159.689593 


1744.77706 


12398.9936 


74 


.054895 


2095.452434 


13269.48927 


67997.0902 


156.714705 


1585.08746 


10654.2166 


75 


.052784 


1858.143405 


11174.03684 


54727.6009 


152.717358 


1428.37276 


9069.1291 


76 


.050754 


1633.958993 


9315.89343 


43553.5641 


147.673238 


1275.65540 


7640.7564 


77 


.048801 


1423.441179 


7681.93444 


34237.6707 


141.524253 


1127.98216 


6365.1010 


78 


.046924 


1227.169188 


6258.49326 


26555.7362 


i34. 321344 


986.45791 


5237.1188 


79 


.045120 


1045.649028 


5031.32407 


20297.2430 


126.031467 


852.13656 


4250.6609 


80 


.043384 


879.400291 


3985.67505 


15265.9189 


116.762239 


726.10510 


3398.5243 


81 


.041716 


728.814963 


3106.27475 


11280.2438 


106.655809 


609.34286 


2672.4192 


82 


.040111 


594.127809 


2377.45979 


8173.9691 


95.842742 


502.68705 


2063.0764 


83 


.038569 


475.433998 


1783.33198 


5796.5093 


84.554037 


406.84431 


1560.3893 


84 


.037085 


372.594038 


1307.89798 


4013.1773 


73.100445 


322.29027 


1153.5450 


85 


.035659 


285.163053 


935.30395 


2705.2793 


61.717074 


249.18982 


831.2547 


86 


.034287 


212.478170 


650.14089 


1769.9754 


50.738556 


187.47275 


582.0649 


87 


.032969 


153,567377 


437.66272 


1119.8345 


40.481541 


136.73419 


394.5922 


88 


.031701 


107.179398 


284.09535 


682.1718 


31 . 182321 


96.25265 


257.8580 


89 


.030481 


71.874792 


176.91595 


398.0764 


23.095410 


65.07033 


161.6053 


90 


.029309 


46.014967 


105.04116 


221 . 1605 


16.317164 


41.97492 


96.5350 


91 


.028182 


27.927996 


59.02619 


116.1193 


10.947480 


25.65776 


54.5601 


92 


.027098 


15.906363 


31.09819 


57.0931 


6.878653 


14,71028 


28.9023 


93 


.026056 


8.415927 


15.19183 


25.9949 


4.033592 


7.83163 


14.1920 


94 


.025053 


4.058646 


6.77590 


10.8031 


2.143990 


3.79803 


6.3604 


95 


.024090 


1.758554 


2.71726 


4.0272 


1.019183 


1.65404 


2.5624 


96 


.023163 


0.671734 


0.95870 


1.3099 


0.423175 


0.63486 


.9083 


97 


.022272 


0.222724 


0.28697 


.3512 


0.149910 


0.21169 


.2735 


98 


.021416 


0.064247 


0.06425 


.0642 


0.061776 


0.06178 


.0618 



308 



TABLE III. 
FRATERNAL EXPERIENCE— FOUR PER CENT. 











^ 








x 


a - Nx 

ax dT 


A X = ^L 
D x 


P _M X 
X "N^ 


1 


3 


100 N 70 

N x -N 70 


|70-xax 




Life 


Whole Lif j 


Annual 


1 C.H g bD 


Annuity of $100, 


Value of $1.00 




Annuity. 


Sin _le 
Premium. 


Premium. 


O 

o 
o 




beginning at 70. 


to Age 70. 


20 


20.4916 


211.863 


10.34 


8.16 


2.66 


19.960 


21 


20.3731 


216.420 


10.62 


8.34 


2.80 


19.817 


22 


20.2500 


221.155 


10.92 


8.53 


2.95 


19.669 


23 


20.1220 


226.077 


11.24 


8.72 


3.11 


19.515 


24 


19.9890 


231.193 


11.57 


8.93 


3.28 


19.354 


.25 


19.8508 


236.507 


11.91 


9.14 


3.46 


19.187 


26 


19.7074 


242.025 


12.28 


9.37 


3.65 


19.014 


27 


19.5585 


247.750 


12.67 


9.61 


3.85 


18.833 


28 


19.4040 


253.691 


13.07 


9.86 


4.07 


18.646 


29 


19.2439 


259.851 


13.50 


10.13 


4.30 


18.451 


30 


19.0780 


266.232 


13.96 


10.41 


4.54 


18.249 


31 


18.9060 


272.844 


14.43 


10.70 


4.81 


18.039 


32 


18.7280 


279.691 


14.93 


11.01 


5.09 


17.821 


33 


18.5439 


286.775 


15.47 


11.34 


5.39 


17.595 


34 


18.3534 


294.101 


16.02 


11.68 


. 5.71 


17.361 


35 


18.1565 


301.672 


16.62 


12.04 


6.07 


17.118 


36 


17.9532 


309.493 


17.24 


12.42 


6.44 


16.866 


37 


17.7432 


317.569 


17.90 


12.82 


6.85 


16.606 


38 


17.5267 


325.897 


18.59 


13.24 


7.29 


16.336 


39 


17.3036 


334.476 


19.33 


13.69 


7.76 


16.057 


40 


17.0740 


343.310 


20.11 


14.16 


8.28 


15.768 


41 


16.8376 


352.398 


20.93 


14.65 


8.84 


15.470 


42 


16.5948 


361.740 


21.80 


15.16 


9.45 


15.162 


43 


16.3455 


371.328 


22.72 


15.71 


10.12 


14.844 


44 


16.0898 


381.160 


23.69 


16.28 


10.85 


14.515 


45 


15.8276 


391.245 


24.72 


16.88 


11.65 


14.176 


46 


15.55S7 


401.588 


25.81 


17.51 


12.54 


13.826 


47 


15.2830 


412.193 


26.97 


18.18 


13.51 


13.464 


48 


15.0006 


423.053 


28.20 


18.89 


14.60 


13.090 


49 


14.7117 


434.165 


29.51 


19.64 


15.81 


12.704 


50 


14.4102 


445.530 


30.91 


20.42 


17.16 


12.305 


51 


14.1144 


457.138 


32.39 


21.26 


18.67 


11.893 


52 


13.S067 


468.974 


33.97 


22.14 


20.39 


11.469 


53 


13.4930 


481.040 


35.65 


23.07 


22.33 


11.030 


54 


13.1738 


493.314 


37.45 


24.05 


24.56 


10.576 


55 


12.8494 


505.793 


39.36 


25.09 


27.13 


10.108 


56 


12.5200 


518.462 


41.41 


26.18 




9.623 


57 


12.1862 


53] .299 


43.60 


27.34 




9.122 


58 


11 .8484 


544.294 


45.94 


28.56 




8.602 


59 


11.5067 


557.436 


48.45 


29.85 




8.064 


60 


11.1619 


570.696 


51.13 


31.21 




7.504 


61 


10.8144 


584.061 


54.01 


32.64 




6.922 


62 


10.4649 


597.505 


57.10 


34.16 




6.315 


63 


10.1138 


611.009 


60.41 


35.75 




5.679 


64 


9.7617 


624.549 


63.98 


37.42 




5.012 



309 



TABLE III. 
FRATERNAL EXPERIENCE— FOUR PER CENT— Continued. 











o 








X 


N x 

Life 
Annuity. 


A -™± 
D x 

Whole Life 

Single 
Premium. 


p _M X 
lx ~N x 

Annual 
Premium. 


1 

M 

g, 

o 
o 
o 


O O 


100 N 70 

N x -N 70 

Annuity of $100, 
beginning at 70. 


U-x^x 

Value of SI. 00 
to Age 70. 


65 


9.4092 


638.106 


67.82 


39.18 




4.308 


66 


9.0571 


651.650 


71.95 


41.03 




3.563 


67 


8.7060 


665.153 


76.40 


42.96 




2.769 


68 


8.3566 


678.593 


81.21 


44.99 




1.919 


69 


8.0095 


691.944 


86.39 


47.09 




1.000 


70 


7.6653 


705.182 


92.00 








71 


7.3248 


718.275 


98.06 








72 


6.9889 


731.197 


104.62 








73 


6.6578 


743.931 


111.74 








74 


6.3325 


756.442 


119.45 








75 


6.0135 


768.710 


127.83 








76 


5.7014 


780.715 


136.93 








77 


5.3967 


792.433 


146.83 








78 


5.0999 


803.848 


157.62 








79 


4.8117 


814.936 


169.37 








80 


4.5323 


825.682 


182.18 








81 


4.2621 


836.074 


196.16 








82 


4.0016 


846.093 


211.44 








83 


3.7510 


855.733 


228.13 








84 


3.5102 


864.990 


246.42 








85 


3.2799 


873.850 


266.43 








86 


3.0598 


882.315 


288.36 








87 


2.8500 


890.386 


312.42 








88 


2.6507 


898.052 


338.80 








89 


2.4614 


905.329 


367.81 








90 


2.2828 


912.202 


399.60 








91 


2.1135 


918.711 


434.69 








92 


1.9551 


924.805 


473.02 








93 


1.8051 


930.572 


515.52 








94 


1.6695 


935.789 


560.51 








95 


1.5452 


940.571 


608.71 








96 


1.4272 


945 . 107 


662.21 








97 


1.2885 


950.444 


737.64 








98 


1.0000 


961.538 


961.54 









TABLE IV. 
FRATERNAL EXPERIENCE— FOUR PER CENT. 





1000 M x 


1000 M x 


M x -M x+20 


M x -M x+10 


M x -M x+5 


X 


N x -N x+2 o 


N x -N x+ io 


N x -N x+20 


N x -N x+ i 


N x -N x+5 


Age. 


20 Payment Life. 


10 Payment Life. 


20 Year Term 
Premium. 


10 Year Term 
Premium. 


5 Year Term 
Premium. 


20 


15.65 


25.66 


5.32 


4.98 


4.97 


21 


16.00 


26.21 


5.41 


5.03 


5.01 


22 


16.36 


26.79 


5.51 


5.09 


5.06 


23 


16.73 


27.39 


5.62 


5.15 


5.11 


24 


17.12 


28.02 


5.74 


5.22 


5.16 


25 


17.53 


28.67 


5.88 


5.30 


5.22 


26 


17.96 


29.35 


6.03 


5.39 


5.29 


27 


18.40 


30.06 


6.19 


5.49 


5.36 


28 


18.86 


30.79 


6.38 


5.59 


5.45 


29 


19.34 


31.55 


6.58 


5.72 


5.54 


30 


19.85 


32.34 


6.80 


5.85 


5.65 


31 


20.37 


33.16 


7.04 


6.00 


5.76 


32 


20.92 


34.01 


7.31 


6.17 


5.89 


33 


21.49 


34.90 


7.60 


6.35 


6.04 


34 


22.08 


35.82 


7.93 


6.56 


6.20 


35 


22.70 


36.77 


8.28 


6.79 


6.38 


36 


23.35 


37.76 


8.67 


7.04 


6.58 


37 


24.02 


38.78 


9.11 


7.31 


6.80 


38 


24.73 


39.84 


9.58 


7.62 


7.05 


39 


25.46 


40.94 


10.10 


7.95 


7.32 


40 


26.23 


42.08 


10.67 


8.31 


7.63 


41 


27.03 


43.26 


11.29 


8.70 


7.96 


42 


27.87 


44.48 


11.98 


9.14 


8.32 


43 


28.74 


45.74 


12.72 


9.61 


8.71 


44 


29.65 


47.04 


13.55 


10.13 


9.13 


45 


30.61 


48.38 


14.45 


10.70 


9.59 


46 


31.62 


49.77 


15.43 


11.33 


10.09 


47 


32.67 


51.22 


16.52 


12.02 


10.65 


48 


33.79 


52.71 


17.70 


12.79 


11.27 


49 


34.96 


54.26 


19.00 


13.63 


11.95 


50 


36.21 


55.87 


20.42 


14.57 


12.70 


51 


37.52 


57.54 


21.98 


15.60 


13.53 


52 


3S.92 


59.28 


23.67 


16.73 


14.46 


53 


40.40 


61.08 


25.52 


17.99 


15.48 


51 


41.97 


62.96 


27.54 


19.37 


16.61 


55 


43.65 


64.91 


29.73 


20.90 


17.86 


56 


45.45 


66.95 


32.10 


22.58 


19.24 


57 


47.37 


69.07 


34.67 


24.43 


20.77 


58 


49.43 


71.29 


37.45 


26.48 


22.46 


50 


51.05 


73.61 


40.45 


28.73 


24.34 


60 


54.04 


76.05 


43.68 


31.21 


26.41 


61 


5(5.77 


78.61 


47.30 


33.93 


28.71 


62 


59.41 


81.31 


50.86 


36.94 


31.25 


63 


62.43 


84.15 


54. S3 


40.24 


34.07 


64 


65.74 


87.17 


59.07 


43.87 


37.19 


65 


69.27 


90.38 


63.59 


47.85 


40.64 


66 


73.26 


93.79 


08.50 


52.22 


42.60 


67 


77.35 


97.43 


73.46 


57.01 


44.64 


68 


81.95. 


101.34 


78.80 


62.26 


46.79 


69 


86.96 


105.54 


84.60 


68 00 


49.03 















311 



TABLE V. 
MODIFIED COMMUTATION COLUMNS FOR MONTHLY PREMIUMS. 

National Fraternal Congress Table of Mortality and 4 per cent interest. 



Age 


K 2 


log.N» 


K 2 


log. M£ a 


Age 


N 12 


log.N- 


K 2 


log.Mi a 


20 


914228 


5.961055 


9846.39 


3.99328 


60 


70996.2 


.851235 


3856.17 


.58616 


21 


869496 


.939268 


9622.97 


.98331 


61 


64545.4 


.809865 


3708.36 


.5691!) 


22 


826700 


.917348 


9407.69 


.97348 


62 


58489 . 1 


. 767075 


3557.91 


.55119 


23 


785758 


.895289 


9200.28 


.96380 


63 


52814.6 


.722754 


3404.90 


.53210 


24 


746591 


.873083 


9000.47 


.95427 


64 


47509.8 


.676783 


3249.33 


.51179 


25 


709123 


.850722 


8807.55 


.94486 


65 


42563.0 


.629032 


3091.40 


.49016 


26 


6732S3 


.828198 


8621.32 


.93557 


66 


37962.6 


.579356 


2931.20 


.46705 


27 


639002 


.805502 


8441.20 


.92640 


67 


33697.4 


.527596 


2768.91 


.44231 


28 


606213 


.782625 


8266.98 


.91735 


68 


29756.5 


.473582 


2604.96 


.41581 


29 


574854 


.759558 


8098.17 


.90839 


69 


26128.8 


.417120 


2439.69 


.38734 


30 


544S65 


.736289 


7934.29 


.89951 


70 


22803.3 


.357998 


2273.64 


.35671 


31 


5161S8 


.712808 


7775.19 


.89071 


71 


19768.9 


.295982 


2107.32 


.32373 


32 


488768 


.689103 


7620.47 


.8819S 


72 


17014.4 


.230817 


1941.41 


.28812 


33 


462553 


.665161 


7469.75 


.87331 


73 


14528.2 


.162212 


1776.77 


.24964 


34 


437493 


.640971 


7322.66 


.86467 


74 


12298.5 


.089852 


1614.15 


.20796 


35 


413539 


.616517 


7178.93 


.85606 


75 


10312.9 


.013381 


1454.56 


. 16273 


36 


390646 


.591783 


7038.24 


.84746 


76 


8558.49 


3.932397 


1299.04 


.11361 


37 


36S771 


.566757 


6900.32 


.83887 


77 


7022.00 


.846461 


1148.66 


.06024 


38 


347S72 


.541419 


6764.74 


.83025 


78 


5689.46 


.755071 


1004.54 


.00195 


39 


327909 


.515753 


6631.06 


.82159 


79 


4546.38 


.657666 


867.761 


2.93840 


40 


308S44 


.489739 


6499.14 


.81285 


80 


3577.77 


.553612 


739.416 


.86S89 


41 


290641 


.463357 


6368.60 


.80404 


81 


2768.17 


.442193 


620.513 


.79275 


42 


273266 


.436586 


6239 . 19 


.79513 


82 


2101.80 


.322591 


511.903 


.70919 


43 


256686 


.409402 


6110.39 


.78607 


83 


1562.71 


. 193878 


414.303 


.61731 


44 


240S70 


.381783 


5982.02 


.77685 


84 


1134.98 


.054988 


328.199 


.51614 


45 


225788 


.353701 


5854.06 


.76746 


85 


802.943 


2.904685 


253.758 


.40442 


46 


211412 


.325130 


5726.48 


.75789 


86 


551.505 


.741549 


190.910 


.28083 


47 


197714 


.296037 


5599 . 16 


.74813 


87 


366.366 


.563915 


139.241 


. 14377 


48 


184668 


.266392 


5471.76 


.73813 


88 


234.330 


.369828 


98.0174 


1.99130 


49 


172249 


.236157 


5344.04 


.72787 


89 


143.539 


.156971 


66.2633 


.82127 


50 


160433 


.205294 


5215.94 


.71733 


90 


83.671 


1.922575 


42.7445 


.63088 


51 


149198 


.173763 


5087.11 


.70047 


91 


46.055 


.663277 


26.1282 


.41711 


52 


138522 


.141519 


4957.15 


.69523 


92 


23.710 


.374932 


14.9800 


.17551 


53 


12S385 


.108514 


4826.06 


.6S360 


93 


11.282 


.052386 


7.9752 


0.90174 


54 


118767 


.074696 


4693.42 


.67149 


94 


4.890 


0.689309 


3.8677 


.58745 


55 


109650 


.040009 


4559.15 


.658S9 


95 


1.900 


.278754 


1.6844 


.22645 


56 


101017 


.004394 


4423.03 


.64572 


96 


.646 


1.810233 


.6465 


1.81057 


57 


92850.3 


4.967783 


4284.75 


.63193 


97 


.184 


.264818 


.2156 


.33365 


58 


85134.6 


.930106 


4144.23 


.61744 


98 


.034 


2.531479 


.0629 


2.79865 


59 


77854.7 


.891285 

1 


4001.47 


.60222 













312 



TABLE V». 
ANNUITIES, SINGLE PREMIUMS, AND ANNUAL PREMIUMS. 

Momently Basis. 
National Fraternal Congress Table of Mortality and 4 per cent interest. 



















Age 


a x 


A x 


Px 


Age 


a x 


A x 


Px 


20 


19.9879 


216.06 


10.81 


60 


10.6568 


582.03 


54.62 


21 


19.8694 


220.71 


11.11 


61 


10.3091 


595.67 


57.78 


22 


19.7463 


225.54 


11.42 


62 


9.9595 


609.38 


61.19 


23 


19.6183 


230.56 


11.75 


63 


9.6082 


623.16 


64.86 


24 


19.4853 


235.77 


12.10 


64 


9.2559 


636.98 


68.82 


25 


19.3471 


241 . 19 


12.47 


65 


8.9031 


650.81 


73.10 


26 


19.2037 


246.82 


12.85 


66 


8.5508 


664.63 


77.73 


27 


19.0548 


252.66 


13.26 


67 


8.1994 


678.41 


82.74 


28 


18.9003 


258.72 


13.69 


68 


7.8497 


692.13 


88.17 


29 


18.7402 


265.00 


14.14 


69 


7.5022 


705.76 


94.07 


30 


18.5743 


271.50 


14.62 


70 


7.1576 


719.27 


100.49 


31 


18.4023 


278.25 


15.12 


71 


6.8167 


732.64 


107.48 


32 


18.2243 


285.23 


15.65 


72 


6.4803 


745.84 


115.09 


33 


18.0402 


292.45 


16.21 


73 


6.1487 


758.84 


123.41 


34 


17.8496 


299.93 


16.80 


74 


5.8228 


771.63 


132.52 


35 


17.6527 


307.65 


17.43 


75 


5.5031 


784.16 


142.49 


36 


17.4494 


315.62 


18.09 


76 


5.1903 


796.43 


153.45 


37 


17.2394 


323.86 


18.79 


77 


4.8848 


808.41 


165.50 


38 


17.0229 


332.35 


19.52 


78 


4.5871 


820.09 


178.78 


39 


16.7998 


341 . 10 


20.30 


79 


4.2978 


831.44 


193.46 


40 


16.5701 


350.11 


21.13 


80 


4.0173 


842.44 


209.70 


41 


16.3337 


359.38 


22.00 


81 


3.7458 


853.09 


227.75 


42 


16.0909 


368.90 


22.93 


82 


3.4838 


863.36 


247.82 


43 


15.8416 


378.68 


23.90 


83 


3.2316 


873.25 


270.22 


44 


15.5858 


388.71 


24.94 


84 


2.9889 


882.77 


295.35 


45 


15.3236 


399.00 


26.04 


85 


2.7565 


891.89 


323.56 


46 


15.0547 


409.54 


27.20 


86 


2.5341 


900.61 




47 


14.7789 


420.36 


28.44 


87 


2.3215 


908.95 




48 


14.4965 


431.44 


29.76 


88 


2.1191 


916.89 




49 


14.2076 


442.77 


31.16 


89 


1.9263 


924.45 




50 


13.9120 


454.36 


32.66 


90 


1.7435 


931.62 




51 


13.6101 


466.20 


34.25 


91 


1.5694 


938.45 




52 


13.3024 


478.27 


35.95 


92 


1.4053 


944.88 




53 


12.9886 


490.58 


37.77 


93 


1.2485 


951.03 




54 


12.6693 


503.10 


39.71 


94 


1 . 1044 


956.68 




55 


12.3449 


515.82 


41.78 


95 


.9705 


961.94 




56 


12.0154 


528.75 


44.01 


96 


.8413 


967.00 




57 


11.6815 


541.S4 


46.38 


97 


.6915 


972.88 




58 


11 .3436 


555.10 


48.94 


98 


.3800 


985.10 




59 


11.0017 


568.51 


51.67 











313 



TABLE VI. 

FRATERNAL EXPERIENCE— THREE AND ONE-HALF PER CENT. 

Commjutation Columns. 



X 


D x = l x v x 


N X =2D X 


S X = 2N X 


c x = 


M X = 2C X 


R X = 2M X 


20 


50256.6 


1116620 


20395400 


242. 786 


12496.5 


426927 


21 


48314.3 


1066360 


1927S800 


235.044 


12253.7 


414430 


22 


46445.4 


1018050 


1S2 12400 


227.550 


12018.7 


402176 


23 


44647.3 


971606 


17194300 


220.293 


11791.2 


390157 


24 


42917.2 


926959 


16222700 


213.689 


11570.9 


378366 


25 


41252.2 


884042 


15295700 


207.281 


11357.2 


366795 


26 


39649.9 


842790 


14411700 


201.456 


11149.9 


35543S 


27 


3S107.6 


S03140 


13568900 


195.788 


10948.4 


3442SS 


28 


36623 . 1 


765032 


12765800 


190.643 


10752.6 


333340 


29 


35194.0 


728409 


12000800 


185.978 


10562.0 


322587 


30 


33818.0 


693215 


11272400 


181.410 


10376.0 


312025 


31 


32492.9 


659397 


10579200 


177.270 


10194.6 


301649 


32 


31216.9 


626904 


9919750 


173.525 


10017.3 


291454 


33 


29987.7 


595687 


9292850 


170.141 


9843.74 


281437 


34 


28803.5 


565699 


8697160 


167.087 


9673.60 


271593 


35 


27662.4 


536895 


8131460 


164.335 


9506.51 


261919 


36 


26562.6 


509233 


7594560 


161.858 


9342.18 


252412 


37 


25502.5 


482670 


7085330 


159.902 


91S0.32 


243070 


3S 


24480.2 


457168 


6602660 


158.416 


9020.42 


233890 


39 


23493.9 


432688 


6145490 


157.100 


8862.00 


224870 


40 


22542.3 


409194 


5712800 


156.180 


8704.90 


216008 


41 


21623.9 


386652 


5303610 


155.614 


8548.72 


207303 


42 


20737.0 


36502S 


4916960 


155.591 


8393.11 


198754 


43 


19880.2 


344291 


4551930 


155.833 


8237.51 


190361 


44 


19052.1 


324411 


4207640 


156.092 


8081.69 


182123 


45 


18251.7 


305359 


3883230 


156.361 


7925.60 


174041 


46 


17478.1 


287107 


3577870 


156.831 


7769.24 


166115 


47 


16730.3 


269629 


3290760 


157.665 


7612.41 


158346 


48 


16006.8 


252899 


3021130 


158.820 


7454 . 74 


150734 


49 


15306.7 


236892 • 


2768230 


160.074 


7295.92 


143279 


50 


14629 . 1 


221585 


2531340 


161.754 


7135.85 


135983 


51 


13972.6 


206956 


2309760 


163.972 


6974.10 


128847 


52 


13336.1 


192983 


2102800 


166.179 


6810.13 


121873 


53 


12718.9 


179647 


1909S20 


168.985 


6643.95 


115063 


54 


12119.8 


166928 


1730170 


171.864 


6474.96 


108419 


55 


11538.1 


154808 


1563240 


175.083 


6303.10 


101944 


56 


10972.9 


143270 


1408430 


178.733 


6128.02 


95641.2 


57 


10423 . 1 


132297 


1265160 


182.479 


5949.29 


89513.2 


58 


9888.16 


121874 


1132860 


186.292 


5766.81 


83563.9 


59 


9367.46 


111986 


1010990 


190.529 


5580.52 


77797.1 


60 


8860.14 


102619 


899004 


194.755 


5389.99 


72216.6 


61 


8365.79 


93758.5 


796385 


199.190 


5195.23 


66826.6 


62 


7883.69 


85392.7 


702626 


203.559 


4996.04 


61631.4 


63 


7413.54 


77509.0 


617233 


207.958 


4792.48 


56635.4 


64 


6955.89 


70095.5 


539724 


212.148 


4584 52 


51842.9 



314 



TABLE VI. 
FRATERNAL EXPERIENCE— THREE AND ONE-HALF PER CENT— Continued. 

Commutation Columns. 



X 


D x =l x v x 


N X =2D X 


S X = 2N X 


c x = 

d x v x+1 


M X = 2C X 


R X = 2M X 


65 


6507.54 


63139,6 


469629 


216.229 


4372.37 


47258.4 


66 


6071.25 


56632.1 


406489 


220.091 


4156.14 


42886.0 


67 


5645.86 


50560.9 


349857 


223.444 


3936.05 


38729.9 


68 


5231.48 


44915.0 


299296 


226.319 


3712.61 


34793.8 


69 


4828.26 


39683.5 


254381 


228.475 


3486.29 


31081.2 


70 


4436.52 


34855.2 


214697 


229.965 


3257.82 


27594.9 


71 


4056.51 


30418.7 


179842 


230.504 


3027.85 


24337.1 


72 


3688.83 


26362.2 


149423 


229.851 


2797.35 


21309.3 


73 


3334.23 


22673.4 


123061 


228.117 


2567.50 


18511.9 


74 


2993.37 


19339.2 


100388 


224.949 


2339.38 


15944.4 


75 


2667.20 


16345.8 


81048.4 


220.270 


2114.43 


13605.0 


76 


2356.72 


13678.6 


64702.6 


214.024 


1894.16 


11490.6 


77 


2063.00 


11321.9 


51024.0 


206.103 


1680.14 


9596.43 


78 


1787.14 


9258.89 


39702.1 


196.558 


1474.04 


7916.29 


79 


1530.15 


7471.75 


30443.2 


185.318 


1277.48 


6442.25 


80 


1293.08 


5941.60 


22971.4 


172.518 


1092.16 


5164.77 


81 


1076.84 


4648.52 


17029.8 


158.347 


919.640 


4072.61 


82 


882.076 


3571.68 


12381.3 


142.981 


761.293 


3152.97 


83 


709.266 


2689.60 


8809.60 . 


126.749 


618.312 


2391.68 


84 


558.532 


1980.33 


6120.00 


110.109 


491.563 


1773.37 


85 


429.535 


1421.80 


4139.67 


93.4121 


381.454 


1281.81 


86 


321.597 


992.266 


2717.87 


77.1665 


288.042 


900.356 


87 


233.555 


670.669 


1725.60 


61.8643 


210.875 


612.314 


88 


163.793 


437.114 


1054.93 


47.8834 


149.011 


401.439 


89 


110.371 


273.321 


617.811 


35.6365 


101.128 


252.428 


90 


71.0020 


162.950 


344.490 


25.2992 


65.4913 


151.300 


91 


43.3015 


91.9475 


181.540 


17.0557 


40.1921 


85.808 


92 


24.7815 


48.6460 


89.592 


10.7684 


23.1364 


45.616 


93 


13.1750 


23.8645 


40.946 


6.34501 


12.3680 


22.480 


94 


6.38444 


10.6895 


17.082 


3.38888 


6.0230 


10.112 


95 


2.77965 


4.3050 


6.392 


1.61875 


2.6341 


4.089 


96 


1.06690 


1.5254 


2.087 


0.67537 


1.0153 


1.455 


97 


0.35546 


0.4585 


0.562 


0.24041 


0.3400 


0.440 


98 


0.10303 


0.1030 


0.103 


0.09955 


0.0995 


0.100 



315 



TABLE VII. 

FRATERNAL EXPERIENCE— THREE PER CENT. 

Commutation Columns. 



X 


D x = l x v* 


N X = 2D X 


S X = 2N X 


c x = 

d x v x+1 


M X = 2C X 


Rx = 2M x 


20 


55367.6 


1340690 


25841300 


268.774 


16318.2 


588033 


21 


53486.2 


12S5330 


24500600 


261.467 


16049.4 


571715 


22 


51666.9 


1231840 


23215300 


254.359 


15788.0 


555666 


23 


49907.6 


1180170 . 


21983500 


247.442 


15533.6 


539878 


24 


48206.7 


1130270 


20803300- 


241.190 


15286.2 


524344 


25 


46561.3 


1082060 


19673000 


235.092 


15045.0 


509058 


26 


44970.0 


1035500 


18590900 


229.596 


14809.9 


494013 


27 


43430.6 


990527 


17555400 


224.220 


14580.3 


479203 


28 


41941.4 


947097 


16564900 


219.387 


14356.1 


464623 


29 


40500.4 


905155 


15617800 


215.057 


14136.7 


450267 


30 


39105.8 


864655 


14712700 


210.793 


13921.6 


436130 


31 


37756.0 


825549 


13848000 


206.983 


13710.8 


422208 


32 


36449.3 


787793 


13022500 


203.594 


13503.9 


408497 


33 


35184.2 


751344 


12234700 


200.593 


13300.3 


394993 


34 


33958.7 


716160 


11483400 


197.948 


13099.7 


381693 


35 


32771.7 


682201 


10767200 


195.633 


12901.7 


368593 


36 


31621.5 


649429 


10085000 


193.620 


12706.1 


355691 


37 


30506.9 


617808 


9435580 


192.208 


12512.5 


342985 


38 


29426.2 


587301 


8817770 


191.347 


12320.3 


330473 


39 


28377.7 


557875 


8230470 


190.678 


12128.9 


318153 


40 


27360.5 


529497 


7672600 


190.482 


11938.2 


306024 


41 


26373.2 


502136 


7143100 


190.713 


11747.7 


294086 


42 


25414.3 


475763 


6640960 


191.611 


11557.0 


282338 


43 


24482.4 


450349 


6165200 


192.839 


11365.4 


270781 


44 


23576.5 


425867 


5714850 


194.097 


11172.6 


259416 


45 


22695.7 


402290 


5288980 


195.376 


10978.5 


248243 


46 


21839.2 


379594 


4886690 


196.914 


10783 . 1 


237264 


47 


21006.2 


357755 


4507100 


198.923 


10586.2 


226481 


48 


20195.5 


336749 


4149340 


201.353 


10387.3 


215895 


49 


19406.0 


316553 


3812590 


203.928 


10185.9 


205508 


50 


18636.8 


297147 


3496040 


207.068 


9981.99 


195322 


51 


17886.9 


278511 


3198890 


210.927 


9774.93 


185340 


52 


17155.0 


260624 


2920380 


214.804 


9564.00 


175565 


53 


16440.6 


243469 


2659760 


219.491 


9349.20 


166001 


54 


15742.2 


227028 


2416290 


224.314 


9129.70 


156652 


55 


15059.4 


211286 


2189260 


229.625 


8905.39 


147522 


56 


14391.1 


196227 


1977970 


235.549 


8675.77 


138617 


57 


13736.4 


181835 


1781740 


241.654 


8440.22 


129941 


58 


13094.7 


168099 


1599910 


247.902 


8198.56 


121501 


59 


12465.4 


155004 


1431810 


254.770 


7950.66 


113302 


60 


11847.5 


142539 


1276810 


261.685 


7695.89 


105351 


. 61 


11240.8 


130691 


1134270 


268.943 


7434.20 


97655.0 


1 62 


10644.4 


119451 


1003580 


276.177 


7165.26 


90220.8 


63 


10058.2 


108806 


884133 


283.515 


6889.08 


83055.5 


64 


9481.74 


98748.0 


775327 


290.630 


6605.57 


76166.4 



316 






TABLE VII. 
FRATERNAL EXPERIENCE— THREE PER CENT— Continued. 
Commutation Columns. 



X 


D x = l x v x 


N X =2D X 


S X = 2N X 


c x = 

d x v x+1 


M X = 2C X 


R X =SM X 


65 


8914.96 


89266.2 


676579 


297.659 


6314.94 


69560.8 


66 


8357.63 


80351.3 


587313 


304.447 


'6017.28 


63245.9 


67 


7809.77 


71993.6 


506962 


310.586 


5712.83 


57228.6 


68 


7271.72 


64183.9 


434968 


316.110 


5402.25 


51515.8 


69 


6743.21 


56912.1 


370784 


320.670 


5086.14 


46113.6 


70 


6226.71 


50168.9 


313872 


324.327 


4765.47 


41027.5 


71 


5721.03 


43942.2 


263703 


326.666 


4441 . 14 


36262.0 


72 


5227.28 


38221.2 


219761 


327.323 


4114.47 


31820.9 


73 


4748.14 


32993.9 


181540 


326.430 


3787.15 


27706.4 


74 


4283.42 


28245.8 


148546 


323.458 


3460.72 


23919.2 


75 


3835.20 


23962.4 


120300 


318.268 


3137.26 


20458.5 


76 


3405.22 


20127.2 


96337.3 


310.744 


2819.00 


17321.2 


77 


2995.29 


16721.9 


76210.1 


300.696 


2508.25 


14502.2 


78 


2607.36 


13726.6 


59488.2 


288.163 


2207.56 


11994.0 


79 


2243.26 


11119.3 


45761.6 


273.003 


1919.39 


9786.42 


80 


1904.92 


8876.02 


34642.3 


255.381 


1646.39 


7867.03 


81 


1594.05 


6971.10 


25766.3 


235.540 


1391.01 


6220.64 


82 


1312.08 


5377.05 


18795.2 


213.715 


1155.47 


4829.63 


83 


1060.15 


4064.97 


13418.2 


190.374 


941.754 


3674.16 


84 


838.900 


3004.82 


9353.22 


166.184 


751.380 


2732.41 


85 


648.280 


2165.92 


6348.40 


141.668 


585.196 


1981.03 


86 


487.729 


1517.64 


4182.48 


117.598 


443.528 


1395.83 


87 


355.926 


1029.91 


2664.84 


94.7360 


325.930 


952.301 


88 


250.824 


673.989 


1634.93 


73.6822 


231.194 


626.371 


89 


169.836 


423.165 


960.939 


55.1031 


157.511 


395.177 


90 


109.787 


253.329 


537.774 


39.3090 


102.408 


237.666 


91 


67.2800 


143.542 


284.445 


26.6291 


63.0992 


135.258 


92 


3S.6913 


76.2623 


140.903 


16.8944 


36.4701 


72.1584 


93 


20.6700 


37.5710 


64.6402 


10.0029 


19.5757 


35.6883 


94 


10.0651 


16.9010 


27.0692 


5.36851 


9.5728 


16.1126 


95 


4.40339 


6.8359 


10.1682 


2.57680 


4.2043 


6.5398 


96 


1.69S34 


2.4325 


3.3323 


1.08030 


1.6275 


2.3355 


97 


0.56858 


0.7342 


0.8998 


0.38641 


0.5472 


0.7080 


98 


0.16561 


0.1656 


0.1656 


0.16078 


0.1608 


0.1608 



TABLE VIII. 

FRATERNAL EXPERIENCE. 

Values of Life Annuity Due of $1 and of Single and Level Premiums for $1,000 

Life Insurance. 





S]/ 2 Per Cent Basis. 


3 Per Cent Basis. 


X 


N x 


A M * 


T> M * 


N x 


A M * 


T> M * 




ax= I)7 


a * = d7 


P * = N^ 


a * = D7 


Ax "d7 


Px= n7 


20 


22.218 


248.65 


11.19 


24.214 


294.72 


12.17 


21 


22.071 


253.62 


11.49 


24.031 


300.07 


12.49 


22 


21.919 


258.77 


11.81 


23.842 


305.57 


12.82 


23 1 


21.762 


264.10 


12.14 


23.647 


311.25 


13.16 


24 


21.599 


269.61 


12.48 


23.446 


317.10 


13.52 


25 


21.430 


275.31 


12.85 


23.239 


323.12 


13.90 


26 


21.256 


281.21 


13.23 


23.026 


329.33 


14.30 


27 


21.076 


287.30 


13.63 


22.807 


335.72 


14.72 


28 


20.889 


293.60 


14.06 


22.581 


342.29 


15.16 


29 


20.697 


300.11 


14.50 


22.348 


349.03 


15.62 


' 30 


20.498 


306.82 


14.97 


22.110 


356.00 


16.10 


31 


20.293 


313.75 


15.46 


21.865 


363.14 


16.61 


32 


20.082 


320.89 


15.98 


21.613 


370.48 


17.14 


33 


19.S64 


328.26 


16.53 


21.355 


378.02 


17.70 


34 


19.640 


335.85 


17.10 


21.089 


385.75 


18.29 


35 


19.409 


343.66 


17.71 


20.817 


393.69 


18.91 


36 


19.171 


351.70 


18.35 


20.538 


401.82 


19.56 


37 


18.926 


359.98 


19.02 


20.251 


410.15 


20.25 


38 


18.675 


368.48 


19.73 


19.958 


418.68 


20.97 


39 


18.417 


377.20 


20.48 


19.659 


427.41 


21.74 


40 


18.152 


386.16 


21.27 


19.353 


436.33 


22.55 


41 


17.881 


395.34 


22.11 


19.040 


445.44 


23.40 


42 


17.603 


404.74 


22.99 


18.720 


454.74 


24.29 


43 


17.318 


414.36 


23.93 


18.395 


464.23 


25.24 


44 


17.028 


424.19 


24.91 


18.063 


473.89 


26.23 


45 


16.730 


434.24 


25.96 


17.725 


483.73 


27.29 


46 


16.427 


444.51 


27.06 


17.381 


493.75 


28.41 


47 


16.116 


455.01 


28.23 


17.031 


503.95 


29.59 


48 


15.799 


465.72 


29.48 


16.674 


514.34 


30.85 


49 


15.476 


476.65 


30.80 


16.312 


524.89 


32.18 


50 


15.147 


487.79 


32.20 


15.944 


535.61 


33.59 


51 


14.812 


499.13 


33.70 


15.571 


546.48 


35.10 


52 


14.471 


510.65 


35.29 


15.192 


557.50 


36.70 


53 


14.124 


522.37 


36.98 


14.809 


568.67 


38.40 


54 


13.733 


534.24 


38.79 


14.422 


579.95 


40.21 


55 


13.417 


546.28 


40.72 


14.030 


591.35 


42.15 


56 


13.057 


558.47 


42.77 


13.635 


602.85 


44.21 


57 


12.693 


570.78 


44.97 


13.238 


614.44 


46.42 


58 


12.325 


583.20 


47.32 


12.837 


626.10 


48.77 


59 


11.955 


595.73 


49.83 


12.435 


637.82 


51.29 


60 


11.582 


608.34 


52.52 


12.031 


649.58 


53.99 


61 


11.207 


621.01 


55.41 


11.627 


661.36 


56.88 


62 


10.832 


633.72 


58.51 


11.222 


673.14 


59.98 


63 


10.455 


646.45 


61.83 


10.818 


684.92 


63.31 


64 


10.079 


659.18 


65.41 


10.415 


696.66 


66.89 


65 


9.703 


671.89 


69.25 


10.013 


708.35 


70.74 


66 


9.328 


684.56 


73.39 


9.614 


719.97 


74.89 


67 


8.955 


697.16 


' 77.85 


9.219 


731.50 


79.35 


68 


8.586 


709.67 


82.66 


8.827 


742.91 


84.17 


69 


8.219 


722.06 


87.85 


8.439 


754.19 


89.37 


70 


7.856 


734.32 


93.47 


8.057 


765.33 


94.99 



318 



TABLE IX. 

MODIFIED N x COLUMNS FOR MONTHLY PREMIUMS. 

National Fraternal Congress Mortality Table, and Three Per Cent, Three and 

One-Half Per Cent, and Four Per Cent Interest. 





3% 


31% 


4% 




3% 


3i% 


4% 


X 


N- 


K 2 


N< 2 


X 


K 2 


N* 2 


N- 


20 


1315233 


1093510 


914228 


60 


137071 


98525.1 


70996.2 


21 


1260729 


1044150 


869496 


61 


125503 


89892.7 


64545.4 


22 


1208078 


996692 


826700 


62 


114537 


81749.1 


58489.1 


23 


1157219 


951072 


785758 


63 


104163 


74082.1 


52814.6 


24 


1108092 


907219 


746591 


64 


94370.2 


66880.0 


47509.8 


25 


1060641 


865066 


709123 


65 


85149.7 


60131.4 


42563.0 


26 


1014810 


824550 


673283 


66 


76491.7 


53825.1 


37962.6 


27 


970547 


785608 


639002 


67 


68386.6 


47950.1 


33697.4 


28 


927800 


748182 


606213 


68 


60825.0 


42495.5 


29756.5 


29 


886520 


712215 


574854 


69 


53796.9 


37450.1 


26128.8 


30 


846660 


677653 


544865 


70 


47291.7 


32802.8 


22803.3 


31 


808174 


644443 


516188 


71 


41298.3 


28541.8 


19768.9 


32 


771018 


612536 


488768 


72 


35805.0 


24655.2 


17014.4 


33 


735149 


581883 


462553 


73 


30798.8 


21130.2 


14528.2 


34 


700528 


552440 


437493 


74 


26265.3 


17953.5 


12298.5 


35 


667114 


524160 


413539 


75 


22188.9 


15111.0 


10312.9 


36 


634871 


497003 


390646 


76 


18552.4 


12587.4 


8558.49 


37 


603761 


470927 


368771 


77 


15336.6 


10366.5 


7022. 


38 


573750 


445894 


347872 


78 


12520.6 


8431.16 


5689.46 


39 


544806 


421867 


327909 


79 


10081.5 


6762.96 


4546.38 


40 


516895 


398810 


308844 


80 


7994.71 


5342.55 


3577.77 


41 


4S9988 


376689 


290641 


81 


6233.55 


4149.59 


2768.17 


42 


464056 


355473 


273266 


82 


4769.91 


3162.94 


2101.80 


43 


439069 


335130 


2566S6 


83 


3574.37 


2360.91 


1562.71 


44 


415003 


315630 


240870 


84 


2616.58 


1721.47 


1134.98 


45 


391 S31 


296946 


225788 


85 


1865.87 


1222.70 


802.943 


46 


369529 


279049 


211412 


86 


1291.89 


843.185 


551.505 


47 


34S072 


261915 


197714 


87 


865.154 


562.391 


366.366 


48 


327439 


245517 


184668 


88 


557.873 


361.171 


234.330 


49 


307606 


229S32 


172249 


89 


344.536 


222.143 


143.539 


50 


2SS554 


214837 


160433 


90 


202.498 


130.024 


83.671 


51 


270262 


200510 


149198 


91 


112.390 


71.8663 


46.055 


52 


252711 


1S6S30 


13S522 


92 


58.3464 


37.1528 


23.710 


53 


235SX5 


173778 


12S3S5 


93 


27.9993 


17.7538 


11.282 


54 


219765 


161334 


118767 


94 


12.2399 


7.7281 


4.890 


55 


204337 


149482 


109650 


95 


4.7967 


3.0157 


1.900 


56 


1S95S5 


13S204 


101017 


96 


1.6460 


1.0305 


.646 


57 


175495 


127484 


92850.3 


97 


0.4708 


0.2936 


.184 


58 


162054 


117307 


85134.6 


98 


0.0889 


0.0552 


.034 


59 


149252 


107659 


77854.7 











319 



TABLE X. 
VALUATION COLUMNS BY THE NATIONAL FRATERNAL CONGRESS TABLE 
And Three Per Cent, Three and One-Half Per Cent, and Four Per Cent Interest. 





5% 


H7o 


4% 




3% 


^2% 


47o 


X 


k x 


U x 


Ux 


Ux 


X 


k, 


Ux 


Ux 


Ux 


20 


5.025 


1.0352 


1.0402 


1.04523 


60 


23.2S0 


1.0540 


1.0591 


1.06421 


21 


5.061 


1.0352 


1.0402 


1.04526 


61 


25.266 


1.0560 


1.0612 


1.06627 


22 


5.097 


1.0352 


1.0403 


1.04530 


62 


27.458 


1.0583 


1.0634 


1 .06856 


23 


5.133 


1.0353 


1.0403 


1.04534 


63 


29.901 


1.060S 


1.0660 


1.07110 


24 


5.180 


1.0353 


1.0404 


1.04539 


64 


32.600 


1.0636 


1.0687 


1.07390 


25 


5.228 


1.0354 


1.0404 


1.04544 


65 


35.615 


1.0667 


1.0719 


1.07704 


26 


5.287 


1.0354 


1.0404 


1.04550 


66 


38.983 


1.0702 


1.0754 


1.08054 


27 


5.346 


1.0355 


1.0405 


1.04556 


67 


42.711 


1.0740 


1.0792 


1.08442 


28 


5.417 


1.0355 


1.0406 


1.04563 


68 


46.874 


1.0783 


1.0835 


1.0SS75 


29 


5.499 


1.0357 


1.0407 


1.04572 


69 


51.499 


1 0S30 


1.0883 


1.09356 


30 


5.583 


1.0358 


1.0408 


1 .04581 


70 


56.690 


1.0S84 


1.0937 


1.09S96 


31 


5.679 


1.0358 


1.0409 


1.04590 


71 


62.487 


1.0944 


1.0996 


1.10499 


32 


5.787 


1.0360 


1.0410 


1.04602 


72 


68.937 


1.1010 


1 . 1063 


1.11169 


33 


5.907 


1.0361 


1.0411 


1.04614 


73 


76.208 


1 . 1085 


1.1139 


1.11935 


34 


6.040 


1.0362 


1.0413 


1.04628 


74 


84.339 


1.1169 


1.1224 


1.12771 


35 


6.187 


1.0364 


1.0414 


1.04643 


75 


93.465 


1 . 1263 


1.1317 


1.13720 


30 


6.347 


1.0365 


1.0416 


1.04660 


76 


103.744 


1.1369 


1 . 1424 


1.14789 


37 


6.532 


1.0367 


1.0418 


1.04679 


77 


115.326 


1 . 1488 


1 . 1544 


1.15994 


38 


6.743 


1.0369 


1.0420 


1.04700 


78 


128.457 


1.1623 


1 . 1680 


1.17359 


39 


6.969 


1.0372 


1.0422 


1.04725 


79 


143.315 


1.1776 


1 . 1833 


1 . 18905 


40 


7.223 


1.0374 


1.0425 


1.04751 


80 


160.208 


1.1950 


1.2008 


1.20662 


41 


-7.504 


1.0377 


1.0428 


1.047S0 


81 


179.517 


1.2149 


1.2208 


1.22670 


42 


7.826 


1.0381 


1.0431 


1.04814 


82 


201.590 


1.2376 


1.2437 


1.24965 


43 


8.179 


1.0384 


1.0435 


1.04851 


83 


226.934 


1.2637 


1.2699 


1.27601 


44 


8.552 


1.0388 


1.0438 


1.04889 


84 


256.346 


1.2940 


1.3003 


1.30660 


45 


8.946 


1.0392 


1.0443 


1.04931 


85 


290.463 


1.3292 


1.3356 


1.3420S 


46 


9.374 


1.0397 


1.0447 


1.04974 


86 


330.400 


1.3703 


1.3766 


1.3S361 


47 


9.850 


1.0401 


1.0452 


1.05024 


87 


377.700 


1.4190 


1.4259 


1.432S0 


48 


10.376 


1.0407 


1.0457 


1.05079 


88 


433.842 


1.4769 


1.4840 


1.49119 


49 


10.942 


1.0413 


1.0463 


1.05138 


89 


501.910 


1.5470 


1.5545 


1.5619!) 


50 


11.577 


1.0419 


1.0470 


1.05204 


90 


584. 25S 


1.6318 


1.6397 


1.64763 


51 


12.295 


1.0427 


1.0477 


1.05279 


91 


688.245 


1.7389 


1.7474 


1.7557S 


52 


13.065 


1.0435 


1.0485 


1.05358 


92 


817.337 


1.8719 


1.8810 


1.89003 


53 


13.943 


1.0444 


1.0494 


1.05450 


93 


993.827 


2.0536 


2.0636 


2.0735S 


54 


14.895 


1.0453 


1.0504 


1.05549 


94 


1219.180 


2.2S5S 


2.296S 


2.30794 


55 


15.956 


1.0464 


1.0515 


1.05659 


95 


1517.240 


2.5928 


2.6054 


2.61793 


56 


17.148 


1.0477 


1.0527 


1.05783 


96 


1900.000 


2.9S70 


3.0014 


3.01000 


57 


18.454 


1.0490 


1.0541 


1.05919 


97 


2333.333 


3.4333 


3.4501 


3.46667 


58 


19.887 


1.0505 


1.0556 


1.06068 












59 


21.504 


1.0522 


1.0573 


1.06237 













320 



TABLE XI. 
MAKEHAMIZED NATIONAL FRATERNAL CONGRESS TABLE OF MORTALITY 

(Graduation by Landis.) 



Age. 


lx. 


d x . 


Px- 


q*. 


f*x- 


20 


100000 


503 


.99497 


.00503 


.005029 


21 


99497 


504 


.99493 


.00507 


.005062 


22 


98993 


506 


.99489 


.00511 


.005098 


23 


98487 


507 


.99485 


.00515 


.005138 


24 


97980 


509 


.99481 


.00519 


.005183 


25 


97471 


511 


.99476 


.00524 


.005232 


26 


96960 


514 


.99470 


.00530 


.005286 


27 


96446 


517 


.99464 


.00536 


.005346 


28 


95929 


521 


.99457 


.00543 


.005412 


29 


95408 


526 


.99449 


.00551 


.005486 


30 


94882 


531 


.99440 


.00560 


.005567 


31 


94351 


537 


.99431 


.00569 


.005657 


32 


93814 


543 


.99421 


.00579 


.005756 


33 


93271 


551 


.99409 


.00591 


.005867 


34 


92720 


560 


.99396 


.00604 


.005988 


35 


92160 


569 


.99383 


.00617 


.006123 


36 


91591 


580 


.99367 


.00633 


.006272 


37 


91011 


592 


.99350 


.00650 


.006437 


38 


90419 


606 


.99330 


.00670 


.006620 


39 


89813 


620 


.99310 


.00690 


.006822 


40 


89193 


637 


.99286 


.00714 


.007045 


41 


SS556 


655 


.99260 


.00740 


.007293 


42 


S7901 


676 


.99231 


.00769 


.007566 


43 


87225 


698 


.99200 


.00800 


.007869 


44 


S6527 


723 


.99164 


.00836 


.008204 


45 


85804 


749 


.99127 


.00873 


.008575 


46 


85055 


780 


.99083 


.00917 


.008985 


47 


84275 


812 


.99036 


.00964 


.009439 


4S 


83463 


S4S 


.98984 


.01016 


.009941 


49 


82615 


SSS 


.98925 


.01075 


.010496 


50 


S1727 


930 


.98862 


.01138 


.011111 


51 


80797 


976 


.98792 


.01208 


.011791 


52 


79S21 


1028 


.98712 


.01288 


.012544 


53 


78793 


1082 


.98627 


.01373 


.013377 


54 


77711 


1141 


.98532 


.01468 


.014298 


55 


76570 


1206 


.98425 


.01575 


.015318 


56 


75364 


1275 


.98308 


.01692 


.016446 


57 


740S9 


1349 


.98179 


.01821 


.017694 


58 


72740 


1428 


.98037 


.01963 


.019075 


59 


71312 


1512 


.97880 


.02120 


.020603 


(*)() 


69800 


1601 


.97706 


.02294 


.022293 


61 


6S199 


1696 


.97513 


.02487 


.024164 


62 


66503 


1795 


.97301 


.02699 


.026234 


63 


64708 


1S9S 


.97067 


.02933 


.028524 


64 


62S10 


2005 


.96808 


.03192 


.031058 


65 


60805 


2114 


.96523 


.03477 


.033862 



321 



TABLE XL 

MAKEHAMIZED NATIOiNAL FRATERNAL CONGRESS TABLE OF MORTALITY 

— Continued. 







(Graduation by Landis — Continued.) 




Age. 


l x . 


d x . 


Px- 


q*. 


f*x. 


66 


58091 


2225 


.96209 


.03791 


.036995 


67 


56466 


2337 


.95861 


.04139 


.040387 


68 


54129 


2447 


.95479 


.04521 


.0441S5 


69 


516S2 


2554 


.95058 


.04942 


.048398 


70 


49128 


2656 


.94594 


.05406 


.053048 


71 


46472 


2750 


.94082 


.05918 


.058193 


72 


43722 


2832 


.93523 


.06477 


.063885 


73 


40890 


2902 


.92903 


.07097 


.070184 


74 


37988 


2954 


.92224 


.07776 


.077154 


75 


35034 


2985 


.91480 


.08520 


.084865 


76 


32049 


2993 


.90661 


.09339 


.093397 


77 


29056 


2974 


.89765 


.10235 


. 102838 


78 


26082 


2925 


.88785 


.11215 


.113284 


79 


23157 


2846 


.87710 


.12290 


.124842 


80 


20311 


2734 


.86539 


.13461 


.137631 


81 


17577 


2591 


.85259 


. 14741 


.151781 


82 


14986 


2418 


.83865 


.16135 


. 167438 


83 


12568 


2218 


.82352 


. 17648 


.184761 


84 


10350 


1997 


.80705 


.19295 


.203929 


85 


8353 


1761 


.78918 


.21082 


.225138 


86 


6592 


1516 


.77002 


.22998 


.248605 


87 


5076 


1273 


.74921 


.25079 


.274570 


88 


3803 


1038 


.72706 


.27294 


.303299 


89 


2765 


821 


.70307 


.29693 


.335087 


90 


1944 


627 


.67747 


.32253 


.370259 


91 


1317 


461 


.64996 


.35004 


.409176 


92 


856 


324 


.62150 


.37850 


.452236 


93 


532 


217 


.59211 


.40789 


.499881 


94 


315 


139 


.55873 


.44127 


.552598 


95 


176 


83 


.52841 


.47159 


.610928 


96 


93 


48 


.48387 


51613 


.675468 


97 


45 


24 


.46667 


.53333 


.746879 


98 


21 


12 


.42857 


.57143 


.825893 


99 


9 


6 


.33333 


.66667 


.913319 


100 


3 


3 


.00000 


1.00000 


1.010053 



Constants: k = 110239. 3. 



s = .9955888. g = . 9994988. 



c = 1.1064652. 



322 

TABLE XII. 
COMMUTATION COLUMNS. 

Makehamized National Fraternal Congress Table of Mortality and 4 Per Cent Interest. 



Age. 


D x . 


N x . 


Age. 


D x . 


N x . 


20 


45639.0000 


935010.000 


61 


6233.6000 


67431.500 


21 


43663.0000 


889371.000 


62 


5844.8000 


61197.900 


22 


41770.0000 


845708.000 


63 


5468.4000 


55353.100 


23 


39959.0000 


803938.000 


64 


5103.8000 


49884.700 


24 


38224.0000 


763979.000 


65 


4750.9000 


44780.900 


25 


36563.0000 


725755.000 














66 


4409.3000 


40030.000 


26 


34973.0000 


689192.000 


67 


4079.0000 


35620.700 


27 


33449.0000 


654219.000 


68 


3759.8000 


31541.700 


28 


31990.0000 


620770.000 


69 


3451.8000 


27781.900 


29 


30593.0000 


588780.000 


70 


3155.0000 


24330.100 


30 


29254.0000 


558187.000 














71 


2869.6000 


21175.100 


31 


27971.0000 


528933.000 


72 


2596.0000 


18305.500 


32 


26743.0000 


500962.000 


73 


2334.4000 


15709.500 


33 


25565.0000 


474219.000 


74 


2085.4000 


13375 . 100 


34 


24436.0000 


448654.000 


75 


1849.2000 


11289.700 


35 


23355.0000 


424218.000 














76 


1626.6000 


9440.540 


36 


22318.0000 


400863.000 


77 


1418.0000 


7813.940 


37 


21324.0000 


378545.000 


78 


1223.9000 


6395.940 


38 


20370.0000 


357221.000 


79 


1044.8000 


5172.040 


39 


19455.0000 


336851.000 


80 


881.1800 


4127.240 


40 


18578.0000 


317396.000 














81 


733.2200 


3246.060 


41 


17736.0000 


298818.000 


82 


601.1000 


2512.840 


42 


16927.0000 


281082.000 


83 


484.7200 


1911.740 


43 


16151.0000 


264155.000 


84 


383.8200 


1427.020 


44 


15406.0000 


248004.000 


85 


297.8500 


1043.200 


45 


14690.0000 


232598.000 














86 


226.0400 


745.350 


46 


14001.0000 


217908.000 


87 


167.3600 


519.310 


47 


13339.0000 


203907.000 


88 


120.5700 


351.950 


48 


12703.0000 


190568.000 


89 


84.2730 


231.378 


49 


12090.0000 


177865.000 


90 


56.9660 


147.105 


50 


11500.0000 


165775.000 














91 


37.1090 


90.139 


51 


10932.0000 


154275.000 


92 


23.2030 


53.030 


52 


L0384.0000 


143343.000 


93 


13.8660 


29.827 


53 


9S56.5000 


132958.600 


94 


7.8805 


15.961 


54 


9317.2000 


123102.100 


95 


4.2372 


8.0805 


55 


8855.7000 


113754.900 














96 


2.1426 


3.8433 


56 


8381.0000 


104899.200 


97 


1.0123 


1.7007 


57 


7922.4000 


96518.200 


98 


.44365 


.68839 


58 


7479.0000 


88595.800 


99 


.17892 


.24474 


59 


7050.1000 


81116.800 


100 


.065815 


.065815 


60 


6635.2000 


74066.700 









TABLE XIII. 
ANNUITIES, SINGLE PREMIUMS AND ANNUAL PREMIUMS— ONE LIFE. 

Makehamized National Fraternal Congress Table of Mortality and 4 Per Cent Interest. 





Immediate Life Annuity. 


Single Premium Per $1,000. 


Annual Premium Per $1,000. 


Age. 


a x . 


A x . 


Px- 


20 


$20,487 


$212.02 


$ 10.35 


21 


20.369 


216.56 


10.63 


22 


20.247 


221.28 


10.93 


23 


20.119 


226.18 


11.24 


24 


19.987 


231.27 


11.57 


25 


19.849 


236.55 


11.92 


26 


19.707 


242.04 


12.28 


27 


19.559 


247.74 


12.67 


2S 


19.405 


253.64 


13.07 


29 


19.246 


259.77 


13.50 


30 


19.081 


266.11 


13.95 


31 


18.910 


272.69 


14.42 


32 


18.733 


279.50 


14.92 


33 


18.550 


286.55 


15.45 


34 


18.360 


293.84 


16.00 


35 


18.164 


301.37 


16.59 


36 


17.962 


309.16 


17.21 


37 


17.753 


317.20 


17.87 


38 


17.537 


325.51 


18.56 


39 


17.314 


334.07 


19.30 


40 


17.085 


342.89 


20.07 


41 


16.848 


351.98 


20.89 


42 


16.605 


361.33 


21.76 


43 


16.355 


370.95 


22.68 


44 


16.098 


380.84 


23.66 


45 


15.834 


390.98 


24.69 


46 


15.564 


401.39 


25.79 


47 


15.286 


412.06 


26.96 


48 


15.002 


422.98 


28.20 


49 


14.712 


434.15 


29.51 


50 


14.415 


445.57 


30.91 


51 


14.112 


457.21 


32.40 


52 


13.804 


469.08 


33.98 


53 


13.489 


481.17 


35.67 


54 


13.170 


493.46 


37.47 


00 


12.845 


505.94 


39.39 


56 


12.516 


518.60 


41.43 


57 


12.183 


531.42 


43.62 


58 


11.846 


544.38 


45.96 


59 


11.506 


557.47 


48.45 


60 


11.163 


570.66 


51.12 


61 


10.817 


583.94 


53.98 


62 


10.471 


597.28 


57.04 


63 


10.123 


610.67 


60.33 


64 


9.774 


624.07 


63.85 


65 


9.426 


637.46 


67.63 


66 


9.079 


650.82 


71.69 


67 


8.733 


664.12 


76.05 


68 


8.3S9 


677.33 


80.74 


69 


8.049 


690.43 


85.78 


70 


7.712 


703.39 


91.21 


71 


7.379 


716.19 


97.06 


72 


7.051 


728.79 


103.35 


73 


6.730 


741.17 


110.14 


74 


6.414 


753.31 


117.45 


75 


6.105 


765 . 19 


125.34 


76 


5.804 


776.77 


133.84 


77 


5.511 


788.05 


143.01 


78 


5.226 


799.00 


152.89 


79 


4.950 


809.61 


163.55 


80 


4.684 


819.85 


175.04 



324 



TABLE XIV. 
MAKEHAMIZED NATIONAL FRATERNAL 
CONGRESS. 


Table Showing the Addi- 
tion to be made to the 


Age. 


*xx 


dxx 


log. 1 XX 


log. d xx 


Younger of Two Lives in 
order to obtain the 
Equivalent Equal Ages. 




10000000000 
9899700000 
9799600000 
9699700000 
9600200000 
9500800000 

9401300000 
9301900000 
9202400000 
9102700000 
9002600000 

8902000000 
8801200000 
8699400000 
8596900000 
8493600000 

8388800000 
8283000000 
8175600000 
8066400000 
7955400000 

7842100000 
7726500000 
7608200000 
7486900000 
7362400000 

7234400000 
7102300000 
6966100000 

6825300000 
6679400000 

6528100000 
6371300000 
6208400000 

60391 ()()()()() 
5862900000 

5679800000 

54S9 100000 
5291100000 
5085500000 
4872000000 

4651000000 
4422600000 

4187100000 
3945100000 

3697300000 


100300000 
100100000 
99900000 
99500000 
99400000 
99500000 

99400000 

99500000 

99700000 

100100000 

100600000 

100800000 
101800000 
102500000 
103300000 
104800000 

105800000 
107400000 
109200000 
111000000 
113300000 

115600000 
118300000 
121300000 
124500000 
128000000 

132100000 
136200000 
140800000 
145900000 
151300000 

156800000 
162900000 
169300000 

176200000 
183100000 

190700000 
198000000 
205600000 
213500000 

221000000 

228400000 
235500000 
242000000 
247800000 
252600000 


10.0000000 
9.9956174 
.9912050 
.9867596 
.9822776 
.9777552 

.9731880 
.9685712 
.9638996 
.9591674 
.9543680 

.9494944 
.9445386 
.9394918 
.9343444 
.9290856 

.9237036 
.9181852 
.9125160 
.9066800 
.9006594 

.8944344 

.8879834 
.8812822 
.8743042 
.8670200 

.8593970 
.8513992 
.8429866 
.8341150 
.8247356 

.8147942 
.8042310 
.7929798 
.7809674 
.7681128 

.7543264 
.7395090 
.7235508 
.7063304 
.6877134 

.6675510 
.6456786 
.6219142 
.5960564 
.5678824 


8.00130 
.00043 

7.99957 
.99782 
.99739 
.99782 

.99739 
.99782 
.99870 
8.00043 
.00260 

.00346 
.00775 
.01072 
.01410 
.02036 

.02449 
.03100 
.03822 
.04532 
.05423 

.06296 
.07298 
.08386 
.09517 
.10721 

.12090 
.13418 
. 14860 
.16406 
.17984 

.19535 
.21192 
.22866 
.24601 
.26269 

.28035 
.29667 
.31302 
.32940 
.34439 

.35870 
.37199 
.38382 
.39410 
.40243 




20 
21 
22 
23 


Difference of Ages. 
(Years.) 


Add to 

Younger 

Age. 


24 
25 


1 " 


.50 


26 


2 


1.05 


27 


3 


1.60 


28 


4 


2.19 


29 


5 


2.81 


30 


6 


3.44 


31 


7 


4.10 


32 


8. 


4.78 


33 


9 


5.48 


34 


10 


6.21 


35 


11 


6.96 


36 


12.. 


7.72 


37 


13 


8.50 


38 


14 


9.29 


39 


15 


10.10 


40 


16 


10.93 


41 


17 


11.77 


42 


18 


12.62 


43 


19 


13.49 


44 


20 


14.37 


45 


21 


15.26 


46 


22 


16.16 


47 


23 


17.07 


48 


24 


17.98 


49 


25 


18.91 


50 


26 


19.83 


51 


27 


20.77 


52 


28 


21.71 


53 


29 


22.65 


54 


30 


23.61 


55 


31 


24.56 


56 


32 


25.52 


57 


33 


26.48 


58 


34 


27.44 


59 


35 


28.42 


60 


36 


29.40 


61 


37 


30.37 


62 


38 


31.35 


63 


39 


32.33 


64 


40 


33.31 


65 


41 


34.30 























325 









TABLE XIV. 






MAKEHAMIZED NATIONAL FRATERNAL 
CONGRESS— Con tinued . 


Table Showing the Addi- 
tion to be made to the 












Younger of Two Lives in 


Age. 


1« 


(lxx 


log. lxx 


log. d xx 


order to obtain the 
Equivalent Equal Ages — 


GO 
07 
08 
69 
70 


3444700000 
3188400000 

2929900000 
2071000000 
2413000000 


250)300000 
258500000 
25S900000 
257400000 
254000000 


.5371450) 
.5035730 
.4668628 
.4266810 

.3826580 


40S75 
.41246 
.41313 
.41001 
.40483 


Continued. 


Differences of Ages. 
(Years.) 


Add to 

Younger 
Age. 


71 


2159000000 
1911700000 
1072000000 
1443100000 
1227400000 

1027100000 
844250000 
680280000 
536240000 
412530000 


247900000 
239700000 
22S900000 
215700000 
200300000 

182850000 
163970000 
144040000 
123710000 
103590000 


.3343848 

.2814088 
.2232294 
.1592920 
.0889854 

.0116296 
8.9264748 
.8326906 
.7293582 
.6154612 


.39428 
.37967 
.35965 
.33385 
.30108 

.26210 
.21476 

.15848 
.09240 
.01532 


42 


35.28 


72 
73 


43 

44 


36.27 

37.2(i 


74 


45 


38.25 


75 


46 


39.24 


76 


47 


40.23 


77 


48 


41.22 


78 


49 


42.21 


79 


50 


43.20 


80 






81 

82 
S3 
84 
85 


308940000 
224570000 
157950000 
107120000 
69770000 


84370000 
66620000 
50830000 
37350000 
26309000 


.4898748 
.3513544 
. 1985230 
.0298570 
7.8436706 


7.92619 
.82360 
.70612 
.57229 
.42010 


. 




86 
87 
88 
89 
90 


43461000 

25768000 

14465000 

7643800 

3777800 


17693000 

11303000 

6821200 

3866000 

2043900 


.6380984 
.4110766 
.1603216 
6.8833066 
.5772358 


.24780 
.05319 
6.83386 
.58726 
.31046 






91 
92 
93 
94 
95 


1733900 

733200 

283180 

98940 

30938 


1000700 

450020 

184240 

68002 

22382 


.2390158 
5.8652238 

.4520726 
4.9953718 

.4904850 


. .00030 
5.65323 

.26538 
4.83252 

.34990 






96 
97 
98 
99 
100 


8556 

2066 

429 

75 

11 


6490 

1637 

354 

64 

11 


3.9322820 

.3150864 

2.6326176 

1.8779204 

.0433234 


3.81224 

.21405 

2.54900 

1.80618 

.04139 







326 



TABLE XV. 
COMMUTATION COLUMNS FOR JOINT LIVES. 

Makehamized National Fraternal Congress Table of Mortality and 4 Per Cent Interest. 



Age. 


Dx* 


Nxx 


^xx 


M x * 


20 


4563900000 


83340300000 


44015000 


1358500000 


21 


4344300000 


78776400000 


42238000 


1314500000 


22 


4135000000 


74432100000 


40532000 


1272200000 


23 


3935400000 


70297100000 


38817000 


1231700000 


24 


3745200000 


66361700000 


37287000 


1192900000 


25 


3563900000 


62616500000 


35888000 


1155600000 


26 


3390900000 


59052600000 


34474000 


1119700000 


27 


3226000000 


55661700000 


33181000 


1085200000 


28 


3068800000 


52435700000 


31969000 


1052000000 


29 


2918800000 


49366900000 


30862000 


1020100000 


30 


2775700000 


46448100000 


29824000 


989200000 


31 


2639100000 


43672400000 


28734000 


959380000 


32 


2508800000 


41033300000 


27903000 


930650000 


33 


2384500000 


38524500000 


27014000 


902740000 


34 


2265700000 


36140000000 


26178000 


875730000 


35 


2152400000 


33874300000 


25536000 


849550000 


36 


2044100000 


31721900000 


24789000 


824020000 


37 


1940700000 


29677800000 


24195000 


799230000 


38 


1841800000 


27737100000 


23655000 


775030000 


39 


1747400000 


25895300000 


23120000 


751380000 


40 


1657000000 


24147900000 


22691000 


728260000 


41 


1570600000 


22490900000 


22262000 


705570000 


42 


1487900000 


20920300000 


21905000 


683300000 


43 


1408800000 


19432400000 


21597000 


661400000 


44 


1333000000 


18023600000 


21314000 


639800000 


45 


1260400000 


16690600000 


21071000 


618490000 


46 


1190900000 


15430200000 


20909000 


597420000 


47 


1124200000 


14239300000 


20729000 


576510000 


48 


1060200000 


13115100000 


20605000 


555780000 


49 


998810000 


12054900000 


20530000 


535170000 


50 


939870000 


11056100000 


20471000 


514640000 


51 


S83270000 


10116250000 


20400000 


494170000 


52 


828890000 


9232980000 


20377000 


473770000 


53 


776630000 


8404090000 


20364000 


453400000 


54 


726390000 


7627460000 


20379000 


433030000 


55 


678080000 


6901070000 


20362000 


412650000 


56 


631630000 


6222990000 


20392000 


392290000 


57 


586960000 


5591360000 


20358000 


371900000 


58 


544020000 


5004400000 


20326000 


351540000 


59 


502760000 


4460380000 


20296000 


331210000 


60 


463140000 


3957620000 


20200000 


310920000 


61 


425 130000 


3494480000 


20074000 


290720000 


62 


388700000 


3069350000 


19902000 


270640000 


63 


353850000 


2680650000 


19665000 


250740000 


64 


320570000 


2326800000 


19361000 


231080000 


65 


2SSSS0000 


2006230000 


18977000 


211720000 













327 



TABLE XV. 
COMMUTATION COLUMNS FOR JOINT LIVES— Continued. 
Makehamized National Fraternal Congress Table of Mortality and 4 Per Cent Interest- 
Continued. 



Age. 


Dxx 


N xx 


C.X 


Mxx 


GO 


258790000 


1717350000 


18515000 


192740000 


67 


230320000 


1458560000 


17955000 


174220000 


68 


203510000 


1228240000 


17291000 


156270000 


69 


178390000 


1024730000 


16530000 


138980000 


70 


155000000 


S46340000 


15684000 


122450000 


71 


133360000 


691340000 


14719000 


106760000 


72 


113504000 


557980000 


13685000 


92046000 


73 


95454000 


444476000 


12566000 


78361000 


74 


' 79218000 


349022000 


11385000 


65795000 


75 


64787000 


269804000 


10166000 


54410000 


76 


52131000 


205017000 


8923400 


44244000 


77 


41201000 


152886000 


7694100 


35320000 


78 


31922000 


111685000 


6499100 


27626000 


79 


24195000 


79763000 


5367000 


21127000 


80 


17897000 


55568000 


4321400 


15760000 


81 


12888000 


37669600 


3384200 


11439000 


82 


9007800 


24781600 


2569400 


8054600 


83 


6091900 


15773800 


1885000 


5485200 


84 


3972400 


9681900 


1331900 


3600200 


85 


2487900 


5709500 


902050 


2268300 


86 


1490200 


3221600 


583310 


1366300 


87 


849530 


1731380 


358310 


782940 


88 


458550 


881850 


207920 


424630 


89 


232991 


423300 


113310 


216710 


90 


110720 


190309 


57601 


103400 


91 


48863 


79589 


27116 


45802 


92 


19868.2 


30726 


11725 


18686 


93 


7378.6 


10857.8 


4615.8 


6960.8 


94 


2478.8 


3479.2 


1638.1 


2345. 


95 


745.28 


1000.44 


518.4 


706.92 


96 


198.19 


255.164 


144.6 


188.52 


97 


46.010 


56.974 


35.1 


43.92 


98 


9.1907 


10.9641 


7.3 


8.82 


99 


1.5546 


1.7734 


1.3 


1.52 


100 


.21877 


.21877 


.22 


.22 



328 



TABLE XVI. 
ANNUITIES, SINGLE PREMIUMS AND ANNUAL PREMIUMS— TWO LIVES, 

EQUAL AGES. 

Makehamized National Fraternal Congress Table of Mortality and 4 Per Cent Interest. 





Immediate Joint 








Immediate Joint 








Life Annuity 








Life Annuity 






Age 


&xx 


A X x 


-txx 


Age 


axx 


Axx 


Pxx 


20 


18.2609 


297.65 


16.30 


61 


8.2199 


683.85 


83.19 


21 


18.1334 


302.55 


16.69 


62 


7.8965 


696.28 


88.18 


22 


18.0007 


307.66 


17.09 


63 


7.5758 


708.62 


93.54 


23 


17.8626 


312.97 


17.52 


64 


7.2583 


720.83 


99.31 


24 


17.7190 


318.49 


17.98 


65 


6.9449 


732.89 


105.53 


25 


17.5698 


324.23 


18.45 


















66 


6.6361 


744.76 


112.23 


26 


17.4148 


330.19 


18.96 


67 


6.3326 


756.43 


119.45 


27 


17.2538 


336.38 


19.50 


68 


6.0351 


767.88 


127.23 


28 


17.0868 


342.81 


20.06 


69 


5.7442 


779.07 


135.63 


29 


16.9136 


349.47 


20.66 


70 


5.4604 


789.98 


144.68 


30 


16.7340 


356.38 


21.30 


















71 


5.1841 


800.61 


154.43 


31 


16.5480 


363.53 


21.97 


72 


4.9160 


810.92 


164.95 


32 


16.3555 


370.93 


22.68 


73 


4.6564 


829.90 


176.30 


33 


16.1561 


378.59 


23.43 


74 


4.4058 


830.54 


188.51 


34 


15.9506 


386.51 


24.23 


75 


4.1645 


839.82 


201.66 


35 


15.7381 


394.68 


25.08 


















76 


3 .'9327 


848.73 


215.81 


36 


15.5187 


403.12 


25.98 


77 


3.7107 


857.28 


231.03 


37 


15.2926 


411.82 


26.93 


78 


3.4987 


865.43 


247.36 


38 


15.0595 


420.78 


27.94 


79 


3.2967 


873.20 


264.87 


39 


14.8198 


430.00 


29.02 


80 


3.1048 


880.58 


283.62 


40 


14.5732 


439.49 


30.16 


















81 


2.9229 


887.58 


303.66 


41 


14.3199 


449.23 


31.37 


82 


2.7511 


894.19 


325.03 


42 


14.0600 


459.22 


32.66 


83 


2.5893 


900.41 


347.74 


43 


13.7936 


469.47 


34.04 


84 


2.4373 


906.26 


371.83 


44 


13.5208 


479.96 


35.50 


85 


2.2949 


911.73 


397.29 


45 


13.2420 


490.69 


37.06 


















86 


2.1619 


916.85 


424.09 


46 


12.9571 


501.64 


38.72 


87 


2.0381 


921.61 


452.20 


47 


12.6665 


512.82 


40.49 


88 


1.9230 


926.03 


481.53 


48 


12.3705 


524.21 


42.38 


89 


1.8168 


930.12 


511.95 


49 


12.0693 


535.79 


44.39 


90 


1.7188 


933.89 


543.34 


50 


11.7634 


547.55 


46.55 


















91 


1.6288 


937.35 


575.48 


51 


11.4532 


559.49 


48.85 


92 


1.5465 


940.52 


608.16 


52 


11.1390 


571.57 


51.31 


93 


1.4715 


943.40 


641.10 


53 


10.8213 


5S3.79 


53.95 


94 


1.4036 


946.01 


673.99 


54 


10.5006 


596.13 


56.77 


95 


1.3424 


948.37 


706.49 


55 


10.1774 


608.56 


59.80 


















96 


1.2875 


950.48 


738.25 


56 


9.8523 


621.06 


63.04 


97 


1.2383 


952.37 


769.10 


57 


9.5260 


633.61 


66.51 


98 


1.1930 


954.12 


799.80 


58 


9.1989 


646.19 


70.25 


99 


1.1407 


956.13 


838.17 


59 


8.8718 


658.77 


74.26 


100 


1.0000 


961.53 


961.53 


60 


8.5452 


671.33 


78.56 



























TABLE XVII. 
FRATERNAL CONGRESS EXPERIENCE, FOUR PER CENT— WHOLE LIFE 

POLICY FOR $1000. 



Age. 


Net Re scree at End of Year. 


1 


2 


8 


4 


5 


6 


7 


8 


f) 


10 


/; 


12 


20 


$ 5.78 


$11.79 118.04 


$24.53 


.131.27 


$38.27 


$45.53 


$53.07 


160.89 


168.99 


$77.37 


$86.06 


21 


6.04 


12.32 


18.85 


25.63 


32.67 


39.98 


47.56 


55.42 


63.57 


72.00 


SO. 74 


S9.7S 


22 


6.32 


12.89 


19.71 


26. SO 


34.15 


41.78 


49.69 


57. SS 


66.37 


75. Hi 


S4 26 


93.66 


23 


6.62 


13.48 


20.61 


2S.01 


35.69 


43.65 


51.89 


60.44 


69.28 


78.43 


S7.90 


97.68 


24 


6.91 


14.09 


21.54 


29.26 


37.28 


45.58 


54.18 


63.08 


72.30 


81.83 


91.67 


101.85 


25 


7.23 


14.73 


22.51 


30.58 


3S.94 


47.60 


56.56 


65.84 


75.44 


85.35 


95.60 


106.18 


26 


7.55 


15.39 


23.52 


31.94 


40.66 


49.69 


59.04 


68.70 


78.69 


S9.01 


99.66 


110.65 


27 


7.90 


16.09 


24.57 


33.36 


42.46 


51.88 


61.62 


71.68 


82.08 


92.82 


103.S9 


115.29 


28 


8.26 


16.81 


25.67 


34.84 


44.33 


54.15 


64.29 


74.77 


85.59 


96.75 


10S.25 


120.08 


29 


8.62 


17.56 


26.81 


36.38 


46.27 


56.50 


67.07 


77.98 


89.23 


100.82 


112.76 


125.04 


30 


9.01 


18.34 


28.00 


37.98 


48.30 


58.96 


69.96 


81.31 


93.00 


105.04 


117.43 


130.16 


31 


9.41 


19.15 


29.22 


39.64 


50.39 


61.50 


72.95 


84.75 


96.90 


109.40 


122.25 


135.43 


32 


9.84 


20.01 


30.52 


41.38 


52.59 


64.15 


76.06 


88.33 


100.95 


113.91 


127.22 


140. SS 


33 


10.27 


20.88 


31.85 


43.17 


54.85 


66.87 


79.26 


92.00 


105.10 


118.54 


132.33 


146.47 


34 


10.73 


21.81 


33.25 


45.05 


57.20 


69.72 


82.59 


95.83 


109.41 


123.34 


137.62 


152.28 


35 


11.20 


22.77 


34.69 


46.98 


59.63 


72.64 


86.02 


99.75 


113.83 


128.27 


143.08 


158.27 


36 


11.69 


23.75 


36.18 


48.97 


62.13 


75.66 


89.55 


103.79 


118.39 


133.37 


148.73 


164.46 


37 


12.19 


24.76 


37.70 


51.02 


64.71 


78.76 


93.17 


107.95 


123.10 


138.64 


154.56 


170.84 


38 


12.73 


25.84 


39.32 


53.18 


67.40 


81.99 


96.95 


112.29 


128.02 


144.13 


160.61 


177.47 


39 


13.27 


26.93 


40.96 


55.37 


70.14 


85.30 


100.84 


116.77 


133.09 


149.79 


166.86 


184.31 


40 


13.84 


28.07 


42.67 


57.64 


73.00 


88.75 


104.90 


121.44 


138.36 


155.66 


173.34 


191.36 


41 


14.43 


29.23 


44.42 


59.99 


75.96 


92.34 


109.11 


126.26 


143.81 


161.74 


ISO. 02 


198.65 


42 


15.03 


30.44 


46.23 


62.44 


79.05 


96.07 


113.48 


131.29 


149.47 


168.02 


186.92 


206.15 


43 


15.65 


31.69 


48.14 


65.01 


82.29 


99.96 


118.04 


136.50 


155.33 


174.52 


194.05 


213.89 


44 


16.30 


33.02 


50.15 


67.70 


85.66 


104.02 


122.78 


141.91 


161.41 


181.24 


201.40 


221.88 


45 


16.99 


34.41 


52.25 


70.51 


89.18 


108.25 


127.69 


147.51 


167.67 


188.17 


208.98 


230.07 


46 


17.72 


35.87 


54.44 


73.43 


92.83 


112.61 


132.77 


153.28 


174.14 


195.31 


216.76 


238.47 


47 


18.47 


37.38 


56.71 


76.46 


96.60 


117.12 


138.00 


159.23 


180.79 


202.62 


224.73 


247.09 


48 


19.26 


38.96 


59.08 


79.60 


100.51 


121.79 


143.42 


165.37 


187.62 


210.15 


232.92 


255.91 


49 


20.08 


40.60 


61.51 


82.84 


104.53 


126.58 


148.97 


171.66 


194.62 


217.85 


241.29 


264.91 


50 


20.93 


42.28 


64.04 


86.18 


108.68 


131.53 


154.69 


178.12 


201.82 


225.74 


249.84 


274.09 


51 


21.80 


44.03 


66.64 


89.63 


112.97 


136.61 


160.55 


184.76 


209.18 


233.80 


258.57 


283.44 


52 


22.72 


45.84 


69.34 


93.19 


117.37 


141.84 


166.59 


191.56 


216.73 


242.04 


267.47 


292.97 


53 


23.65 


47.70 


72.11 


96.85 


121.89 


147.21 


172.71 


198.52 


224.42 


250.44 


276.53 


302.66 


54 


24.62 


49.63 


74.96 


100.61 


126.54 


152.71 


179.09 


205.63 


232.28 


259.00 


285.76 


312.49 


55 


25.64 


51.61 


77.91 


104.50 


131.33 


158.37 


185.58 


212.90 


240.30 


267.73 


295.14 


322.46 


56 


26.66 


53.64 


80.93 


108.47 


136.23 


164.14 


192.19 


220.31 


248.46 


276.59 


304.63 


332.54 


57 


27.73 


55.77 


84.06 


112.58 


141.26 


170.07 


198.96 


227.88 


256.78 


285.59 


314.27 


342.75 


58 


28.84 


57.94 


87.27 


116.77 


146.40 


176.12 


205.85 


235.58 


265.21 


294.71 


324.01 


353.06 


59 


29.96 


60.16 


90.53 


121.05 


151.64 


182.28 


212.88 


243.39 


273.76 


303.93 


333.84 


363.42 


60 


31.13 


62.44 


93.90 


125.44 


157.02 


188.57 


220.02 


251.33 


282.43 


313.26 


343.76 


373.86 


61 


32.32 


64.79 


97.34 


129.93 


162.49 


194.96 


227.27 


259.37 


291.20 


322.67 


353.74 


384.36 


62 


33.55 


67.19 


100.88 


134.53 


168.07 


201.47 


234.64 


267.53 


300.06 


332.16 


363.80 


394.88 


63 


34.80 


69.66 


104.47 


139.18 


173.74 


208.06 


242.09 


275.75 


308.97 


341.71 


373.87 


405.41 


64 


36.11 


72.19 


108.15 


143.95 


179.51 


214.77 


249.64 


284.06 


317.97 


351.29 


3S3.97 


415.94 


65 


37.42 


74.73 


111.88 


148.77 


185.35 


221.53 


257.23 


292.42 


326.99 


360.89 


394.06 


426.44 


66 


38.76 


77.35 


115.67 


153.67 


191.26 


228.36 


264.91 


300.82 


336.04 


370.50 


404.14 


436.91 


67 


40.14 


80.01 


119.55 


158.65 


197.24 


235.27 


272.63 


309.27 


345.12 


380.12 


414.21 


447.32 


68 


41.54 


82.72 


123.46 


163.67 


203.28 


242.21 


280.38 


317.73 


354.19 


389.71 


424.20 


457.64 


69 


42.97 


85.47 


127.42 


168.76 


209.37 


249.20 


288.16 


326.20 


363.26 


399.25 


434.14 


467.87 


70 


44.41 


88.24 


131.43 


173.87 


215.48 


256.20 


295.95 


334.67 


372.28 


408.73 


443.97 


477.96 



TABLE XVII.— Continued. 
FRATERNAL CONGRESS EXPERIENCE, FOUR PER CENT— WHOLE LIFE 
POLICY FOR $1000.— Continued. 



I 



Age. 



Net_ Reserve at End of Year. 



13 



U 



15 



16 



17 



18 



19 



20 



21 



U 



20 
21 
22 
23 
24 

25 
26 

27 
28 
29 

30 
31 
32 
33 
34 

35 
36 
37 
38 
39 

40 
41 
42 
43 
44 

45 
46 
47 

48 
49 

50 
51 
52 
53 
54 

55 
56 
57 
58 
59 

60 
61 
62 
63 
64 

65 
66 
67 
68 
69 
70 



$ 

95.05 

99.13 
103.38 
107.79 
112.35 

117.08 
121.97 
127.03 
132.26 
137.66 

143.23 
148.95 
154.87 
160.97 
167.30 

173.82 
180.55 
187.49 
194.70 
202.09 220.22 



104.35 
108.80 
113.43 
118.22 
123.18 

128.32 
133.62 
139.12 
144.78 
150.61 

156.63 
162.82 
169.23 
175.84 

182.68 

189.73 
197.01 
204.51 
212.25 



209.74 
217.60 
225.70 
234.05 
242.62 

251.41 
260.44 
269.65 
279.07 

288.66 

298.44 
308.39 
318.50 
328.76 
339.14 

349.65 
360.26 
370.99 
381.79 
392.62 

403.52 
414.44 
425.36 
436.27 
447.16 

457.99 
468.74 
479.41 
489.97 
500.39 
510.66 



228.43 
236.87 
245.55 
254.47 
263.62 

273.00 
282.59 
292.39 
302.37 
312.53 



113.95 

118.78 
123.79 
128.99 
134.34 

139.89 
145.62 
151.53 
157.62 
163.90 

170.37 
177.05 
183.96 
191.07 
198.42 

206.00 
213.82 
221.85 
230.15 
238.66 

247.43 
256.43 
265.66 
275.13 

284.85 

294.78 
304.93 
315.26 
325.78 
336.46 



123.87 
129.08 
134.49 
140.07 
145.83 

151.79 
157.94 
164.28 
170.80 
177.52 

184.47 
191.63 
199.03 
206.65 
214.52 

222.63 
230.96 
239.53 
248.36 



322.86 
333.36 
344.01 
354.77 
305.67 

376.67 
387.76 
398.93 
410.14 
421.39 

432.67 
443.93 
455.19 
466.40 
477.56 

488.62 
499.59 
510.45 
521.14 
531.68 
542.06 



134.12 
139.71 
145.50 
151.48 
157.65 

164.03 
170.59 
177.35 
184.31 
191.50 

198.92 
206.56 
214.46 

222.58 
230.97 

239.58 
248.44 
257.52 
266.87 
257.42 276.45 



144.69 
150.66 
156.84 
163.23 
169.81 

176.59 
183.56 
190.76 
198.17 
205.83 

213.72 
221.85 
230.24 

238.86 
247.74 



266.72 
276.25 
286.02 
296.04 
306.28 

316.74 
327.40 
338.23 
349.25 
360.42 

371.74 
383.18 
394.75 
406.40 



286.27 306.06 



347.31 
358.31 
369.43 
380.67 
392.01418.14 



403.45 
414.95 
426.50 
438.09 
449.66 

461.24 
472.79 
484.30 
495.74 
507.09 



518 
529 
540 
551 
561 
572 



$ 

155.57 

161.93 

168.51 

175.30 

182.28 

189.47 
196.87 
204.51 
212.38 
220.50 

228.86 
237.47 
246.35 
255.45 
264.83 



256.85 274.43 



266.21 
275.80 
285.66 
295.74 



429.95 
441.78 
453.66 
465.54 

477.38 

489.21 
500.97 
512.66 
524.24 
535.71 

547.03 
558.18 
569.16 
579.94 
590.50 
600.82 



296.32 
306.61 
317.13 

327.88 

338.82 
349.96 
361.27 
372.75 
384.36 

396.09 
407.94 
419.89 
431.91 
443.98 

456.09 
468.23 
480.36 
492.46 
504.51 

516.50 
528.41 
540.21 
551.87 
563.39 



574. 

585. 
596. 
607. 
617. 
628. 



316.61 
327.39 
338.39 
349.60 

301.01 
372.59 
384.33 
396.22 
408.22 

420.33 
432.53 
444.82 
457.14 
469.49 

481.86 
494.21 
506.53 
518.80 
530.99 

543.09 
555.0' 
566.91 

578.58 
590.07 

601.35 
612.43 
623.26 
633.84 
644.17 
654.20 



284.28 
294.37 
304.71 
315.26 

326.07 
337.09 
348.33 
359.77 
371.42 

383.25 
395.24 
407.37 
419.62 
431.98 

444.41 
456.92 
469.47 
482.04 
494.62 

507.17 
519.68 
532.14 
544.52 
556.78 

568.92 
580.90 
592.73 
604.34 
615.75 



$ 

166.78 

173.53 

180.51 

187.69 

195.07 

202.67 
210.51 
218.60 
226.94 
235.51 

244.35 
253.44 
262.79 
272.37 

282.22 

292.30 
302.63 
313.18 
323.98 
335.01 



346.26 366.62 387.09 



626. 
637. 

648, 
658. 
669. 
678. 



178.31 
185.45 
192.82 
200.39 

208.18 

216.22 
224.50 
233.04 
241.82 
250.87 

260.17 
269.72 
279.54 

289.58 
299.89 

310.44 
321.22 
332.22 
343.48 
354.94 



$ 

190.17 

197.69 

205.44 

213.42 

221.64 

230.11 

238.83 
247.81 
257.05 
266.55 

276.30 
286.31 
296.58 
307.08 
317.84 

328.83 
340.04 
351.48 
363.15 



357.73 
369.39 
381.26 
393.30 

405.52 

417.88 
430.34 
442.92 
455.57 

468.29 
481.04 
493.81 
506.57 
519.31 

532.00 
544.61 
557.15 
569.57 
581.83 

593.95 
605.89 
617.62 
629.12 
640.41 

651.42 
662.17 
672.65 

682.81 
692.68 
702.19 



$ 

202.33 

210.24 

218.39 

226.79 

235.43 

244.34 
253.49 
262.92 
272.61 
282.54 

292.75 
303.19 
313.90 
324.84 
336.03 

347.43 
359.07 
370.93 

382.98 



375.02 395.22 



378.48 
390.55 
402.79 
415.21 

427.77 
440.44 
453.21 
466.06 
478.97 

491.90 
504.84 
517.79 
530.68 
543.52 

556.29 
568.95 
581.50 
593.90 
606.12 

618.16 
629.97 
641.57 
652.92 
664.01 



674, 
685, 
695, 
705. 
714 
724. 



399.34 
411.76 
424.36 
437.10 

449.95 
462.90 
475.92 
489.01 
502.10 

515.21 
528.30 
541.34 
554.32 
567.21 

580.00 
592.66 
605.16 
617.48 
629.60 

641.49 
653.15 
664.57 
675.70 
686.55 

697.11 
707.34 
717.27 
726.83 
736.12 
744.94 



407.65 
420.35 
433.00 
445.90 
458.91 

472.03 
485.21 
498.44 
511.70 
524.94 

538.17 
551.34 
564.45 
577.45 
590.34 

603.10 
615.68 
628.09 
640.28 
652.23 

663.95 
675.41 
686.58 
697.46 
708.05 

718.29 
728.23 
737.80 
747.08 
755.90 
764.51 



214.81 
223.11 
231.67 
240.49 
249.56 

258.89 
268.48 
278.35 

288.47 
298.85 

309.47 
320.35 
331.49 
342.84 
354.44 

366.25 

378.28 
390.49 
402.92 
415.51 

428.27 
441 . 18 
454.22 
467.38 
480.64 

493.96 
507.33 
520.72 
534.10 
547.45 

560.74 
573.94 
587.05 
600.03 

612.88 

625.53 
638.00 
650.26 
662.27 
674.02 

685.51 
696.71 
707.61 
718.21 

728.47 

738.40 
747.96 
757.24 
766.04 
774.63 
782.20 



TABLE XVII.— Continued. 
FRATERNAL CONGRESS EXPERIENCE, FOUR PER CENT- 
POLICY FOR $1000.— Continued. 



WHOLE LIFE 



Net Reserve at End of Year. 



25 



26 


27 


28 


29 


30 


31 


32 


33 



34 



35 



36 



227.60 240.73 



236.31 
245.29 
254.52 
264.01 

273.77 
283.80 
294.09 
304.63 
315.43 

326.48 
337.77 
349.31 
361.06 
373.05 

385.24 
397.63 
410.19 
422.95 
435.86 

448.91 
462.09 
475.38 

488.76 
502.21 

515.71 
529.21 
542.70 
556.17 
569.56 

582.86 
596.06 
609.12 
622.03 
634.75 

647.28 
659.58 
671.63 
683.42 
694.94 

706.15 
717.06 
727.66 
737.91 

747.85 

757.39 
766.65 
775.43 
783.99 
791.56 
798.42 813 



249.84 
259.23 

268.88 
278.79 

288.98 
299.42 
310.12 
321.08 
332.29 

343.75 
355.43 
367.35 
379.48 
391.84 

404.38 
417.10 
429.98 
443.04 
456.23 

469.54 
482.94 
496.44 
509.99 
523.60 

537.21 
550.81 
564.36 

577.85 
591.24 

604.51 
617.64 
630.62 
643.39 
655.96 

663.31 
680.38 
692.20 
703.74 
714.96 

725.87 
736.46 
746.71 
756.62 
766.15 



775. 

784. 
792. 
800. 
807. 



254.18 
263.70 
273.50 
283.56 
293.89 

304.48 
315.33 
326.44 
337.80 
349.41 

361.24 
373.30 
385.59 
398.08 
410.72 

423.63 
436.66 
449.82 
463.15 
476.58 

490.10 
503.70 
517.35 
531.05 
544.76 

558.44 
572.09 
585.65 
599.12 
612.45 

625.65 
638.67 
651.50 
664.10 
676.47 

688.58 
700.40 
711.95 
723.18 
734.08 

744.67 
754.90 
764.79 
774.29 
783.49 

792.22 
800.69 
808.24 
815.10 
821.81 
831.91 



% 

267.96 

277.88 

288.09 

298.56 

309.29 

320.28 
331.53 
343.03 
354.78 
366.75 

378.95 
391.37 
404.00 
416.82 
429.81 

442.97 
456.27 
469.69 
483.24 
496.86 

510.57 

524.31 

538.10 

551. 

565.64 

579.36 
592.99 
606.52 
619.92 
633.17 

646.24 
659.09 
671.74 
684.13 
696.24 

708.08 
719.63 
730.85 
741.75 
752.32 

762.53 
772.39 

781.86 
791.03 
799.72 

808.15 
815.67 
822.52 
829.21 
839.13 
869.54 



$ 

282.06 

292.39 

302.99 

313.86 

324.98 

336.36 
347.99 
359.87 
371.98 
384.30 

396.86 
409.61 
422.56 
435.66 
448.95 

462.36 
475.90 
489.54 
503.27 
517.06 

530.90 
544.76 
558.61 
572.43 
586.21 

599.91 
613.49 
626.94 
640.23 
653.34 

666.23 

678.89 
691.30 
703.43 
715.27 

726.82 
738.03 
748.91 
759.46 
769.64 

779.48 

788.91 
798.04 
806.69 
815.08 

822.57 
829.40 
836.07 
845.81 
875.15 



296.48 
307.20 
318.19 
329.45 
340.95 

352.71 
364.70 
376.94 
389.39 
402.06 

414.93 
427.99 
441.22 
454.60 
468.13 

481.77 
495.52 
509.32 
523.21 
537.12 

551.06 
564.97 

578.85 
592.69 
606.43 

620.06 
633.56 

646.88 
660.02 
672.93 

685.61 
698.03 
710.17 
722.01 
733.54 

744.74 
755.61 
766.13 
776.29 

786.08 

795.49 
804.56 
813.18 
821.52 

828.98 

835.78 
842.42 
852.00 
880.33 



$ 

311.21 

322.31 

333.68 

345.31 

357.18 

369.30 
381.64 
394.21 
407.00 
419.98 

433.15 
446.48 
459.97 
473.58 
487.33 

501 . 17 
515.07 
529.02 
543.02 
557.01 

570.99 
584.93 
598.80 
612.59 
626.25 

639.78 
653.14 
666.30 
679.24 
691.93 

704.35 
716.49 
728.32 
739.85 
751.03 

761.87 
772.37 

782.49 
792.26 
801.61 

810.65 
819.21 
827.51 
834.93 
841.71 

848.32 

857.74 
885.14 



326.23 
337.70 
349.44 
361.43 
373.66 

386.11 

398.78 
411.68 
424.76 
438.03 

451.47 
465.05 
478.77 
492.59 
506.52 

520.50 
534.53 

548.58 
562.65 
576.69 

590.67 
604.59 
618.41 
632.10 
645.65 

659.03 
672.21 
685.16 
697.86 
710.29 

722.42 
734.25 
745.76 
756.92 
767.74 

778.20 
788.29 
798.02 
807.34 
816.32 

824.84 
833.08 
840.47 

847.22 
853.80 

863.06 

889.59 



1$ 



341.54 
353.37 
365.47 
377.80 
390.35 

403.13 
416.12 
429.31 
442.67 
456.20 

469.87 
483.67 
497.59 
511.58 
525.65 

539.75 
553.87 
567.98 

582.08 
596.10 

610.06 
623.91 
637.63 
651.20 
664.59 

677.78 
690.74 
703.44 
715.87 
728.00 

739.81 
751.30 
762.44 
773.23 
783.66 

793.71 
803.40 
812.68 
821.62 
830.09 

838.28 
845.62 
852.35 



357.11 
369.29 
381.73 
394.39 
407.26 

420.34 
433.62 
447.07 
460.69 
474.44 

488.32 
502.31 
516.39 
530.51 
544.69 

558.87 
573.04 
587.17 
601.25 
615.24 

629.11 
642.85 
656.44 
669.84 
683.04 

696.00 
708.70 
721.12 
733.24 
745.03 

756.51 
767.62 

778.38 
788.78 
798.79 

808.44 
817.67 
826.57 
834.99 
843.12 

850.43 
857.12 
863.02 



858.88 872.60 
868.01897.56 

893.72 



372.94 
385.46 
398.21 
411.18 
424.35 

437.71 
451.25 
464.95 

478.78 
492.74 

506.80 
520.94 
535.14 
549.36 
563.60 

577.82 
592.00 
606.10 
620.14 
634.03 

647.80 
661.39 

674.80 
687.99 
700.95 

713.65 
726.06 
738.17 
749.95 
761.40 

772.49 
783.21 
793.58 
803.55 
813.16 

822.35 
831.19 
839.57 
847.65 
854.91 

861.57 
868.03 
876.88 
901.12 



389.02 
401.85 
414.90 
428.16 
441.60 

455.22 
468.99 
482.90 
496.92 
511.05 

525.26 
539.51 
553.80 
568.08 
582.35 

596.57 
610.72 
624.76 
638.69 
652.47 

666.08 
679.49 
692.68 
705.63 
718.32 

730.72 
742.81 
754.57 
765.99 
777.05 

787.75 
798.08 
SOS. 02 
817.58 
826.72 

835.57 
843.82 
851.84 
859.10 

S65.71 

S72.14 
S80.86 
904.44 



TABLE XVII.— Continued. 

FRATERNAL CONGRESS EXPERIENCE, FOUR PER CENT— WHOLE LIFE 

POLICY FOR $1000.— Continued. 



Net Reserve at End of Year. 



37 



38 



39 



40 



41 



u 



45 



46 



47 



48 



405.31 
418.43 
431.77 
445.29 

458.98 

472.83 
486.80 
500.90 
515.09 
529.35 

543.66 
557.99 
572.33 
586.64 
600.90 

615.08 
629.16 
643.10 
656.89 
670.51 

683.92 
697.11 
710.05 
722.72 
735.11 

747.18 

758.92 
770.32 
781.35 
792.01 

802.31 
812.20 
821.72 
830.82 
839.57 

847.85 
855.82 
863.00 
869.59 
875.97 
884.57 
907.53 



421.79 
435.20 

448.80 
462.56 
476.47 

490.51 
504.67 
518.92 
533.24 
547.59 

561.98 
576.35 
590.71 
605.00 
619.21 

633.31 
647.28 
661.07 
674.70 
688.11 

701.30 
714.23 
726.89 
739.25 
751.30 

763.01 
774.39 
785.39 
796.02 
806.28 

816.13 
825.61 
834.66 
843.36 
851.59 

859.52 
866.65 
873.20 

879.54 
888.02 
910.41 



438.47 
452.12 
465.96 
479.93 
494.03 

508.25 
522.55 
536.92 
551.33 
565.76 

580.17 
594.56 

608.89 
623.11 
637.25 

651.23 
665.04 
678.66 
692.09 
705.27 

718.19 
730.83 
743.17 
755.19 

766.88 

778.22 
789.19 
799.79 
810.01 
819.83 

829.26 
838.27 
846.92 
855.10 
862.98 

870.07 
876.58 
882.88 
891.25 
913.09 



455.29 
469.18 
483.22 
497.38 
511.65 

526.00 
540.42 

554.87 
569.34 
583.79 

598.21 
612.56 
626.83 
640.97 
654.97 

668.79 
682.43 
695.84 
709.02 
721.92 

734.55 
746.87 

758.87 
770.52 
781.84 

792.77 
803.34 
813.52 
823.30 
832.69 

841.65 
850.26 

858.40 
866.22 

873.27 

879.75 
886.01 

894.27 
915.60 



472.25 
486.34 
500.56 

514.88 
529.28 

543.74 

558.23 
572.74 
587.23 
601.68 

616.06 
630.33 
644.50 
658.51 
672.35 

685.99 
699.40 
712.56 
725.47 
738.07 

750.38 
762.34 
773.97 

785.25 
796.15 

806.68 
816.83 
826.56 
835.91 
844.83 

853.39 

861.48 
869.26 
876.27 
882.71 

888.93 
897.09 
917.94 



489.31 
503.57 
517.94 
532.39 
546.90 

561.43 
575.97 
590.49 
604.97 
619.37 

633.67 

647.85 
661.87 
675.71 
689.35 

702.77 
715.93 
728.81 
741.41 
753.69 

765.63 
777.23 

788.47 
799.34 
809.83 

819.94 
829.64 
838.94 

847.82 
856.34 

864.38 
872.11 

879.08 
885.48 
891.66 

899.73 
920.13 



506.44 
520.85 
535.35 
549.89 
564.46 

579.03 

593.58 
608.09 
622.51 
636.83 

651.02 
665.05 
678.90 
692.54 
705.96 

719.11 
731.99 
744.56 

756.82 
768.74 

780.31 
791.52 
802.36 

812.81 
822.87 

832.53 
841.80 
850.63 
859.11 
867.11 

874.78 
881.72 
888.09 
894.23 
902.19 

922.18 



523.62 
538.15 
552.74 
567.34 
581.94 

596.52 
611.05 
625.49 
639.82 
654.03 

668.07 
681.92 
695.57 
708.97 
722.13 

734.99 
747.55 
759.79 
771.69 
783.23 

794.41 
805.21 
815.62 
825.64 
835.26 

844.48 
853.28 
861.71 
869.67 
877.30 

884.19 
890.53 
896.63 
904.51 
924.09 



540.82 
555.44 
570.07 
584.71 
599.31 

613.86 
628.32 
642.67 
656.89 
670.93 

684.79 
698.43 
711.84 

724.98 
737.83 

750.38 
762.60 

774.47 
785.99 
797.14 

807.90 

818.28 
828.26 
837.84 
847.02 

855.77 
864.16 
872.07 
879.66 

886.52 

892.82 
898.88 
906.68 
925.89 



558.01 
572.67 
587.33 
601.93 
616.53 

631.01 
645.37 
659.60 
673.65 
687.51 

701.15 
714.55 
727.69 
740.52 
753.06 

765.26 
777.11 
788.59 
799.72 
810.45 

820.79 
830.74 
840.27 
849.41 
858.13 

866.47 
874.34 

881.89 
888.72 
894.99 

901.00 
908.71 
927.57 



575.14 
589.82 
604.47 
619.06 
633.56 

647.93 
662.17 
676.23 
690.09 
703.73 

717.12 
730.25 
743.08 
755.59 

767.78 

779.61 
791.07 
802.16 
812.86 
823.17 

833.08 

842.58 
851.68 
860.34 
868.64 

876.48 
883.98 
890.76 
896.99 
902.99 

910.62 
929.15 



$ 

592.20 

606.86 

621.47 

635.98 

650.36 

664.61 

678.67 
692.54 
706.17 
719.56 

732.68 
745.49 
758.00 
770.16 
781.97 

793.41 
804.48 
815.14 
825.42 
835.30 

844.75 
853.81 
862.44 
870.70 

878.49 

885.95 
892.70 
898.90 
904.86 
912.42 

930.63 



Net Reserve at End of Year. 



49 



50 



51 



52 



53 



54 



55 



56 



57 



58 



59 



60 



609.13 
623.75 
638.28 
652.68 
666.93 
681.00 



625 
640 
654 
669 
683 
697 



642.54 
656.95 
671.22 
685.30 
699.16 
712.79 



658.94 
673.21 
687.28 
701 . 15 
714.77 
728.14 



675 
689, 
703. 
716. 
730. 
743. 



690.97 
704.83 
718.45 
731.80 
744.86 
757.61 



706.54 
720.15 
733.50 
746.55 
759.28 
771.69 



721 
735 

748 
760 
773 

785. 



736.64 
749.67 
762.39 
774.76 

786.78 
798.42 



751.12 
763.82 
776.18 
788.19 
799.81 
811.04 



765 
777 
789 
801 
812 
823, 



778.82 
790.80 
802.39 
813.59 
824.39 
834.77 



TABLE XVII.— Continued. 

FRATERNAL CONGRESS EXPERIENCE, FOUR PER CENT— WHOLE LIFE 

POLICY FOR $1000.— Continued. 



Age. 


A T ct Reserve at End of Year. 


























49 


50 


51 


52 


53 


54 


55 


56 


57 


58 


59 


60 




$ 


% 


% 


% ' 


% 


$ 


% 


$ 


% 


% 


$ 


$ 


26 


694.86 


710.70 


726.16 


741.22 


755.84 


770.02 


783.72 


796.95 


809.67 


821.88 


833.57 


844.74 


27 


708.49 


724.07 


739.25 


753.99 


768.27 


782.09 


795.40 


808.23 


820.53 


832.30 


843.56 


854.28 


28 


721.88 


737.17 


752.03 


766.43 


780.35 


793.78 


806.69 


819.10 


830.97 


842.31 


853.13 


863.40 


29 


734.98 


749.96 


764.48 


778.52 


792.06 


805.08 


817.59 


829.56 


841.00 851.90 


862.26 


872.09 


30 


747.79 


762.43 


776.60 


790.25 


803.39 


816.00 


828.08 


839.62 


850.61861.06 


870.98 


880.35 


31 


760.27 


774.56 


788.34 


801.60 


814.33 


826.52 


838.16 849.25 


859.80869.80 


879.26 


SSS.21 


32 


772.42 


786.33 


799.72 


812.57 


824.87 


836.62 


847. 82 1 858. 47 


868.57 878.11 


887.15 


895.61 


33 


784.21 


797.72 


810.70 


823.13 


835.00 


846.31 


857.06,867.26 


876.90 886.03 


894.57 


902.66 


34 


795.63 


808.74 


821.29 


833.29 


844.72 


855.58 


865.89 


875.62 


884.84'893.48 


901.65 


909.04 


35 


806.67 


819.35 


831.48 


843.03 


854.01 


864.43 


874.27 


883.60 


892.32 900.58 


908.05 


914.90 


36 


817.31 


829.57 


841.25 


852.36 


862.90 


872.85 


882.28 


891 . 10 


899.45 907.01 


913.93 


920.50 


37 


827.55 


839.37 


850.61 


861.27 


871.34 


880.88 


889.81 


898.26 


905.91 


912.91 


919.56'927.38 


38 


837.39 


848.77 


859.56 


869.76 


879.41 


888.45 


897.01 


904.75 


911.84 


918.57 


926.49 


942.94 


39 


846.81 


857.75 


868.08 


877.86 


887.01 


895.68 


903.52 


910.70 


917.52 


925.54 


942.21 




40 


855.84 


866.30 


876.22 


885.49 


894.28 


902.22 


909. 50^16. 41 


924.54 


941.43 






41 


864.43 


874.48 


883.89 


892.79 


900.85 


908.23 


915.24 923.48 


940.61 








42 


872.64 


882.19 


891.22 


899.40 


906.89 


914.00 


922. 361939. 74 










43 


880.39 


889.56 


897.86 


905.47 


912.69 


921.17 


938.82 












44 


887.81 


896.24 


903.97 


911.30 


919.92 


937.85 














45 


894.52 


902.38 


909.83 


918.59 


936.82 
















46 


900.69 
906.61 


908.27 
915.69 


917.19 
934.57 


935.73 


















47 




48 


914.11 


933.34 




Net Reserve at End of Year. 


49 


932.03 








Age. 


61 


62 


63 


64 


65 


66 


67 


68 


69 


70 


71 


72 




% 


% 


% 


% 


% 


$ 


% 


% 


% 


$ IS 


$ 


20 


792.01 


804.72 


816.95 


828.70 


839.94 


850.68 


860.92 


870.65 


879.88 


888.60 896.86 


904.59 


21 


803.58 


815.89 


827.70 


839.00 


849.81 


860.11 


869.89 


879.18 


887.95 


896.26.904.04 


911.40 


22 


814.77 


826.66 


838.03 


848.91859.26 


869.10 


878.45 


887.27 


895.63 


903.45 910.86 


917.56 


23 


825.55 


837.00 


847.94 


858.37 


868.27 


877.67 


886.55 


894.97 


902.84 


910.29,917.03 


923.21 


24 


835.92 


846.93 


857.42 


867.39 


876.86 


885.80 


894.27 


902.19 


909.69 


916.48 922.70 


928.60 


25 


845.86 


856.43 


866.47 


876.00 


885.00 


893.53 


901.51 


909.07 


915.90 


922.16 928.10 


935.09 


26 


855.39 


865.50 


875.10 


884.17 


892.76 


900.79 


908.40 


915.29 


921.59 


927.58 934.62 


949.26 


27 


864.48 


874.15 


883.29 


891.94 


900.04 


907.71 


914.64 


921.00 


927.03 


934.12 948.87 




28 


873.15 


882.36 


891.08 


899.24 


906.97 


913.96 


920.37 


926.45 


933.60 


948.46 






29 


881.38 


890.17 


898.41 


906.20 


913.25 


919.71 


925.84 


933.05 


948.04 








30 


889.22 


897.52 


905.38 


912.49 


919.01 


925.19 


932.46 


947.58 










31 


896.59 


904.52 


911.69 


918.27 


924.51 


931.85 


947.11 












32 


903.61 


910.86 


917.50 


923.79 


931.20 


946.60 














33 


909.97 


916.67 


923.04 


930.52 


946.07 
















34 


915.81 
921.39 


922.24 
929.04 


929.80 
944.92 


945.51 


















35 




36 


928.23 


944.30 




Net Reserve at End of Year. 


37 


943.64 








Age. 


73 


74 


75 


76 


77 


78 
















$ 


$ 


$ 


% 


% 


% 














20 


911.91 


918.53 


924.60 


930.35 


937.12 


951.20 














21 


918.05 


924.16 


929.95 


936.76 


950.92 
















22 


923.70 


929.52 


936.37 


950.62 


















23 


929.07 


935.97 


950.30 




















24 


935.54 


949.97 






















25 


949.62 

























334 



TABLE XVIII. 
AMERICAN EXPERIENCE MORTALITY TABLE. 



X 


lx 


dx 


1000 q x 


e x 


X 


l x 


d x 


1000 q x 


e x 


10 


100,000 


749 


7.490 


48.72 


53 


66,797 


1,091 


16.333 


18.79 


11 


99,251 


746 


7.516 


48.08 


54 


65,706 


1,143 


17.396 


18.09 


12 


98,505 


743 


7.543 


47.45 


55 


64,563 


1,199 


18.571 


17.40 


13 


97,762 


740 


7.569 


46.80 


56 


63,364 


1,260 


19.885 


16.72 


14 


97,022 


737 


7.596 


46.16 


57 


62,104 


1,325 


21.335 


16.05 


15 


96,285 


735 


7.634 


45.50 


58 


60,779 


1,394 


22.936 


15.39 


16 


95,550 


732 


7.661 


44.85 


59 


59,385 


1,468 


24.720 


14.74 


17 


94,818 


729 


7.688 


44.19 


60 


57,917 


1,546 


26.693 


14.10 


18 


94,089 


727 


7.727 


43.53 


61 


56,371 


1,628 


28.880 


13.47 


19 


93,362 


725 


7.765 


42.87 


62 


54,743 


1,713 


31.292 


12.86 


20 


92,637 


723 


7.805 


42.20 


63 


53,030 


1,800 


33.943 


12.26 


21 


91,914 


722 


7.855 


41.53 


64 


51,230 


1,889 


36.873 


11.67 


22 


91,192 


721 


7.906 


40.85 


65 


49,341 


1,980 


40.129 


11.10 


23 


90,471 


720 


7.958 


40.17 


66 


47,361 


2,070 


43.707 


10.54 


24 


89,751 


719 


8.011 


39.49 


67 


45,291 


2,158 


47.647 


10.00 


25 


89,032 


718 


8.065 


38.81 


68 


43,133 


2,243 


52.002 


9.47 


26 


88,314 


718 


8.130 


38.12 


69 


40,890 


2,321 


56.762 


8.97 


27 


87,596 


718 


8.197 


37.43 


70 


38,569 


2,391 


61.993 


8.48 


28 


86,878 


718 


8.264 


36.73 


71 


36,178 


2,448 


67.665 


8.00 


29 


86,160 


719 


8.345 


36.03 


72 


33,730 


2,487 


73.733 


7.55 


30 


85,441 


720 


8.427 


35.33 


73 


31,243 


2,505 


80.178 


7.11 


31 


84,721 


721 


8.510 


34.63 


74 


28,738 


2,501 


87.028 


6.68 


32 


84,000 


723 


8.607 


33.92 


75 


26,237 


2,476 


94.371 


6.27 


33 


83,277 


726 


8.718 


33.21 


76 


23,761 


2,431 


102.311 


5.88 


34 


82,551 


729 


8.831 


32.50 


77 


21,330 


2,369 


111.064 


5.49 


35 


81,822 


732 


8.946 


31.78 


78 


18,961 


2,291 


120.827 


5.11 


36 


81,090 


737 


9.089 


31.07 


79 


16,670 


2,196 


131.734 


4.74 


37 


80,353 


742 


9.234 


30.35 


80 


14,474 


2,091 


144.466 


4.39 


38 


79,611 


749 


9.408 


29.62 


81 


12,383 


1,964 


158.605 


4.05 


39 


78,862 


756 


9.586 


28.90 


82 


10,419 


1,816 


174.297 


3.71 


40 


78,106 


765 


9.794 


28.18 


83 


8,603 


1,648 


191.561 


3.39 


41 


77,341 


774 


10.008 


27.45 


84 


6,955 


1,470 


211.359 


3.08 


42 


76,567 


785 


10.252 


26.72 


85 


5,485 


1,292 


235.552 


2.77 


43 


75,782 


797 


10.517 


26.00 


86 


4,193 


1,114 


265.681 


2.47 


44 


74,985 


812 


10.829 


25.27 


87 


3,079 


933 


303.020 


2.18 


45 


74,173 


828 


11.163 


24.54 


88 


2,146 


744 


346.692 


1.91 


46 


73,345 


848 


11.562 


23.81 


89 


1,402 


555 


395.863 


1.66 


47 


72,497 


870 


12.000 


23.08 


90 


847 


385 


454.545 


1.42 


48 


71,627 


896 


12.509 


22.36 


91 


462 


246 


532.466 


1.19 


49 


70,731 


927 


13.106 


21.63 


92 


216 


137 


634.259 


.98 


50 


69,804 


962 


13.781 


20.91 


93 


79 


58 


734.177 


.80 


51 


(iS,S12 


1,001 


14.541 


20.20 


94 


21 


18 


857.143 


.64 


52 


67,S4, 


1,044 


15.3S9 


19.49 


95 


3 


3 


1000.000 


.50 



33 5 



TABLE XIX. 

AMERICAN EXPERIENCE— FOUR PER CENT. 

Commutation Columns. 



D* 



N x 



M x 



6755.641 
6447.156 
6152.593 
5871.333 
5602. 77S 

5346.364 
5101.492 
4867.702 
4644.497 
4431.356 

4227.832 
4033.496 
3847.894 
3670.647 
3501.380 

3339.739 
3185.391 
3037.974 
2897.185 
2762.733 

2634.305 
2511.641 
2394.487 
2282.574 
2175.649 

2073.496 
1975.910 
1882.645 
1793.520 
1708.314 

1626.862 
1548.970 
1474.492 
1403.242 
1335.081 

1269.830 
1207.360 
1147.501 
1090.126 
1035.085 

982.2302 
931.4364 

882.5892 
835.5838 
790.3230 



137908.321 
131152.680 
124705.524 
118552.931 

112681.598 

107078.820 

101732.456 

96630.964 

91763.262 

87118.765 

82687.409 
78459.577 
74426.081 
70578.187 
66907.540 

63406.160 
60066.421 
56881.030 
53843.056 
50945.871 

48183.138 
45548.833 
43037.192 
40642.705 
38360.131 

36184.482 
34110.986 
32135.076 
30252.431 
28458.911 

26750.597 
25123.735 
23574.765 
22100.273 
20697.031 

19361.950 
18092.120 
16884.760 
15737.259 
14647.133 

13612.048 
12629.817 
11698.381 
10815.792 
9980.2079 



1451.4759 
1402.8223 
1356.2274 
1311.6047 
1268.8716 

1227.9486 
1188.7063 
1151.1274 
1115.1419 
1080.6354 

1047.5473 

1015.8196 

985.3544 

956.1015 

928.0128 

901.0419 
875.1444 
850.2430 
826.2993 
803.2765 

781.1084 
759.7633 
739.2106 
719.3936 
700.2597 

681.7857 
663.9491 
646.6814 
629.9652 
613.7403 

597.9936 
582.6723 
567.7670 
553.2313 
539.0410 

525.1397 
511.5097 
498.0873 
484.8464 
471.7342 

458.6901 
445.6742 
432.6515 
419.5918 
406.4691 



42004.234 

40552. 75S 
39149.936 
37793.709 
364S2.104 

35213.232 
33985.283 
32796.577 
31645.449 
30530.307 

29449.672 
28402.125 
27386.305 
26400.951 
25444.849 

24516.836 
23615.794 
22740.650 
21890.407 
21064.108 

20260.831 
19479.723 
18719.961 
17980.750 
17261.356 

16561.096 
15879.310 
15215.361 
14568.680 
13938.715 

13324.975 
12726.981 
12144.308 
11576.541 
11023.310 

10484.269 
9959.1291 
9447.6194 
8949.5321 
8464.6857 

7992.9515 
7534.2614 
7088.5872 
6655.9357 
6236.3439 



336 



TABLE XIX. 

AMERICAN EXPERIENCE— FOUR PER CENT.— Continued. 

Commutation Columns. 



X 


D x 


N x 


M x 


R x 


55 


746.7065 


9189.8849 


393.2497 


5829.8748 


56 


704.6535 


8443.1784 


379.9160 


5436.6251 


57 


664.0783 


7738.5249 


366.4428 


5056.7091 


58 


624.9134 


7074.4466 


352.8195 


4690.2663 


59 


587.0969 


6449.5332 


339.0380 


4337.4468 


60 


550.5613 


5862.4363 


325.0831 


3998.4088 


61 


515.2547 


5311.8750 


310.9520 


3673.3257 


62 


481.1291 


4796.6203 


296.6437 


3362.3737 


63 


448.1477 


4315.4912 


282.1674 


3065.7300 


64 


416.2850 


3867.3435 


267.5410 


2783.5626 


65 


385.5146 


3451.0585 


252.7817 


2516.0216 


66 


355.8120 


3065.5439 


237.9064 


2263.2399 


67 


327.1735 


2709.7319 


222.9531 


2025.3335 


68 


299.6005 


2382.5584 


207.9637 


1802.3804 


69 


273.0969 


2082.9579 


192.9831 


1594.4167 


70 


247.6878 


1809.8610 


178.0778 


1401.4336 


71 


223.3970 


1562.1732 


163.3135 


1223.3558 


72 


200.2700 


1338.7762 


148.7786 • 


1060.0423 


73 


178.3688 


1138.5062 


134.5801 


911.2637 


74 


157.7573 


960.1374 


120.8289 


776.6836 


75 


138.4886 


802.3801 


107.6277 


655.8547 


76 


120.5954 


663.8915 


95.0611 


548.2270 


77 


104.0936 


543.2961 


83.1975 


453.1659 


78 


88.97350 


439.2025 


72.0811 


369.9684 


79 


75.21453 


350.2290 


61.7442 


297.8873 


80 


62.79449 


275.0144 


52.2170 


236.1431 


81 


51.65655 


212.2199 


43.4942 


183.9261 


82 


41.79190 


160.5634 


35.6164 


140.4319 


83 


33.18048 


118.7715 


28.6124 


104.8155 


84 


25.79269 


85.59102 


22.5007 


76.2031 


85 


19.55883 


59.79833 


17.2589 


53.7024 


86 


14.37665 


40.23950 


12.8290 


36.4435 


87 


10.15101 


25.86285 


9.15627 


23.6145 


88 


6.802926 


15.71184 


6.19861 


14.45882 


89 


4.273472 


8.908914 


3.93081 


8.25962 


90 


2.482463 


4.635442 


2.30417 


4.32881 


91 


1.301991 


2 152979 


1.21918 


2.02464 


92 


.5853109 


.8509883 


.552581 


.805462 


93 


.2058384 


.2056774 


.195621 


.252881 


94 


.0520121 


.059X390 


.0503106 


.0572596 


95 


.0072269 


.0072269 


.0069490 


.0069490 



337 



TABLE XX. 
AMERICAN EXPERIENCE AND FOUR PER CENT. 





Single and Annual Premiums for Whole 










Life Insurance, and Whole Life Annuity, 


Valuation Columns. 




First Pay went at Once. 








X 


"x 


A x 


P, 


k x 


Ux 


Log. iix 


20 


19.558 


247.774 


12.669 


7.866 


1.0482 


.0204361 


21 


19.452 


251.846 


12.947 


7.917 


1.04S2 


.0204583 


22 


19.342 


256.076 


13.239 


7.969 


1 .0483 


.0204806 


23 


19.228 


200.472 


13.547 


8.022 


1.0483 


.0205034 


24 


19.109 


265.042 


13.870 


8.076 


1.0484 


.02052(H) 


25 


18.985 


269.794 


14.211 


8.130 


1.0485 


.0205498 


26 


IS. 857 


274.737 


14.570 


8.197 


1.0485 


.0205787 


27 


18.723 


279.872 


14.948 


8.265 


1.0486 


.0206078 


28 


18.585 


285. 20S 


15.346 


8.333 


1.0487 


.0206374 


29 


18.440 


290.754 


15.767 


8.415 


1.0488 


.0200728 


30 


18.291 


296.514 


16.211 


8.499 


1.04SS 


.0207085 


31 


18.135 


302.497 


16.680 


8.583 


1.0489 


.0207452 


32 


17.973 


308.714 


17.176 


8.682 


1.0490 


.0207875 


33 


17.806 


315.168 


17.700 


8.795 


1.0491 


.0208361 


34 


17.632 


321.862 


18.255 


8.910 


1.0493 


.0208850 


35 


17.451 


328.809 


18.842 


9.027 


1.0494 


.0209301 


36 


17.263 


336.022 


19.464 


9.172 


1.0495 


.0209980) 


37 


17.069 


343.496 


20.124 


9.320 


1.0497 


.0210023 


38 


16.868 


351.245 


20.824 


9.498 


1.0499 


.0211380) 


39 


16.659 


359.267 


21.566 


9.679 


1.0501 


.0212108 


40 


16.443 


367.575 


22.354 


9.891 


1.0503 


.0213079 


41 


16.220 


376.168 


23.192 


10.109 


1.0505 


.0214010) 


42 


15.988 


385.060 


24.084 


10.359 


1.050S 


.0215088 


43 


15.749 


394.252 


25.033 


10.629 


1.0511 


.0210250 


44 


15.502 


403.752 


26.044 


10.947 


1.0514 


.0217020 


45 


15.248 


413.551 


27.122 


11.289 


1.0517 


.0219086 


46 


14.985 


423.659 


28.273 


11.697 


1.0522 


.0220838 


47 


14.714 


434.063 


29.499 


12.146 


1.0526 


.0222700 


48 


14.436 


444.762 


30.809 


12.668 


1.0532 


.0225003 


49 


14.151 


455.744 


32.207 


13.280 


1.0538 


.0227629 


50 


13.858 


466.988 


33.697 


13.974 


1.0545 


.0230601 


51 


13.559 


478.481 


35.287 


14.755 


1.0553 


.0233946 


52 


13.255 


490.207 


36.984 


15.629 


1.0563 


.0237680 


53 


12.944 


502.154 


38.794 


16.604 


1.0573 


.0241853 


54 


12.628 


514.308 


40.728 


17.704 


1.0584 


.0246547 


55 


12.307 


526.646 


42.792 


18.922 


1.0597 


.0251744 


56 


11.982 


539.153 


44.997 


20.289 


1.0611 


.0257563 


57 


11.653 


551.807 


47.353 


21.800 


1.0627 


.0203994 


58 


11.321 


564.589 


49.872 


23.474 


1.0644 


.0271101 


59 


10.985 


577 483 


52.568 


25.347 


1.0663 


.0279041 


60 


10.648 


590.458 


55.452 


27.425 


1.0685 


.0287837 


61 


10.309 


603.492 


58.539 


29.739 


1.0709 


.0297004 


62 


9.969 


616.557 


61.844 


32.302 


1.0736 


.0308404 


63 


9.630 


629.631 


65.385 


35.136 


1.0765 


.0320305 


64 


9.290 


642.687 


69.180 


38.285 


1.0798 


.0333499 



338 



TABLE XX. 
AMERICAN EXPERIENCE AND FOUR PER CENT.— Continued. 





Single and Annual Premiums for Whole 










Life Insurance, and Whole Life Annuity, 


Valuation Columns. 




First Payment at Once. 








X 


a x 


A x 


Px 


kx 


u x 


Log. u x 


65 


8.952 


655.699 


73.248 


41.807 


1.0835 


.0348203 


66 


8.616 


668.629 


77.607 


45.704 


1.0875 


.0364423 


67 


8.282 


681.452 


82.279 


50.031 


1.0920 


.0382356 


68 


7.952 


694.137 


87.286 


54.855 


1.0970 


.0402259 


69 


7.627 


706.647 


92.649 


60.178 


1 . 1026 


.0424121 


70 


7.307 


718.961 


98.393 


66.090 


1 . 1087 


.0448271 


71 


6.993 


731.046 


104.543 


72.576 


1.1155 


.0474616 


72 


6.685 


742.891 


111.130 


79.602 


1 . 1228 


.0502970 


73 


6.383 


754.505 


118.208 


87.167 


1 . 1307 


.0533295 


74 


6.086 


765.916 


125.845 


95.323 


1.1391 


.0565756 


75 


5.794 


777.159 


134.136 


104.204 


1 . 1484 


.0600829 


76 


5.505 


788.265 


143.188 


113.971 


1 . 1585 


.0639071 


77 


5.219 


799.257 


153.135 


124.941 


1.1699 


.0681631 


78 


4.936 


810.141 


164.119 


137.433 


1 . 1829 


.0729589 


79 


4.656 


820.909 


176.296 


151.720 


1.1978 


.0783803 


80 


4.380 


831.554 


189.870 


168.861 


1.2156 


.0847961 


81 


4.108 


841.988 


204.949 


188.502 


1.2332 


.0910332 


82 


3.842 


852.232 


221.821 


211.089 


1.2595 


. 1002095 


83 


3.580 


862.326 


240.904 


236.952 


1.2864 


. 1093861 


84 


3.318 


872.367 


262.887 


268.004 


1.3187 


. 1201538 


85 


3.057 


882.409 


288.618 


308.133 


1.3605 


.1336851 


86 


2.799 


892.349 


318.816 


361.806 


1.4163 


.1511485 


87 


2.548 


902.006 


354.032 


434.762 


1.4922 


.1738134 


88 


2.310 


911.168 


394.519 


530.070 


1.5919 


.2019150 


89 


2.085 


919.817 


441.222 


655.254 


1.7215 


.2358979 


90 


1.867 


928.179 


497.077 


833.333 


1.9067 


.2802748 


91 


1.654 


936.396 


560.277 


1138.89 


2.2244 


.3472215 


92 


1.454 


944.081 


649.340 


1734.18 


2.8435 


.4538601 


93 


1.291 


950.362 


736.310 


2761.90 


3.9124 


.5924411 


94 


1.137 


956.256 


840.766 


5999.99 


7.2800 


.8621334 


95 


1.000 


961.538 


961.538 









TABLE XXI. 
INTEREST TABLES, THREE PER CENT. 



E 
a 

>* 




Present Value 
of One Dollar 
Due n Years 
Hence=v x . 


Amount of One 
Dollar Per An- 
num at End of 
n Years. 


Present Value 
of One Dollar 
Per Annum for 
n Years. 




ow . 

is* 


Present Value 
of One Dollar 
Due n Years 
Hence= v x . 


Amount of One 
Dollar Per An- 
num at End of 

' n Years. 


Present Value 
of One Dollar 
Per Annum for 
n Years. 


(1) 
1 


(2) 
1.0300 


(3) 
.970874 


(4) 
1.0300 


(5) 
.9709 


(6) 
51 


(7) 
4.5154 


(8) 
.221463 


(9) 
120.6962 


(10) 
25.9512 


2 


1.0609 


.942596 


2.0909 


1.9135 


52 


4.6509 


.215013 


125.3471 


26.1662 


3 


1.0927 


.915142 


3.1836 


2.8286 


53 


4.7904 


.208750 


130.1375 


26.3750 


4 


1.1255 


.888487 


4.3091 


3.7171 


54 


4.9341 


.202670 


135.0716 


26.5777 


5 


1.1593 


.862609 


5.4684 


4.5797 


55 


5.0821 


.196767 


140.1538 


26.7744 


6 


1.1941 


.837484 


6.6625 


5.4172 


56 


5.2346 


.191036 


145.3884 


26.9655 


7 


1.2299 


.813092 


7.8923 


6.2303 


57 


5.3917 


.185472 


150.7800 


27.1509 


8 


1.2668 


.789409 


9.1591 


7.0197 


58 


5.5534 


. 180070 


156.3334 


27.3310 


9 


1.3048 


.766417 


10.4639 


7.7861 


59 


5.7200 


.174825 


162.0534 


27.5058 


10 


1.3439 


.744094 


11.8078 


8.5302 


60 


5.8916 


.169733 


167.9450 


27.6756 


11 


1.3842 


.722421 


13.1920 


9.2526 


61 


6.0684 


. 164789 


174.0134 


27.8404 


12 


1.4258 


.701380 


14.6178 


9.9540 


62 


6.2504 


. 159990 


180.2638 


28.0003 


13 


1.4685 


.680951 


16.0863 


10.6350 


63 


6.4379 


. 155330 


186.7017 


28.1557 


14 


1.5126 


.661118 


17.5989 


11.2961 


64 


6.6311 


.150806 


193.3328 


28.3065 


15 


1.5580 


.641862 


19.1569 


11.9379 


65 


6.8300 


.146413 


200.1627 


28.4529 


16 


1.6047 


.623167 


20.7616 


12.5611 


66 


7.0349 


.142149 


207.1976 


28.5950 


17 


1.6528 


.605016 


22.4144 


13.1661 


67 


7.2459 


. 13S009 


214.4436 


28.7330 


18 


1.7024 


.587395 


24.1169 


13.7535 


68 


7.4633 


. 133989 


221.9069 


28.8670 


19 


1.7535 


.570286 


25.8704 


14.3238 


69 


7.6872 


. 130086 


229.5941 


28.9971 


20 


1.8061 


.553676 


27.6765 


14.8775 


70 


7.9178 


.126297 


237.5119 


29.1234 


21 


1.8603 


.537549 


29.5368 


15.4150 


71 


8.1554 


.122619 


245.6672 


29.2460 


22 


1.9161 


.521893 


31.4529 


15.9369 


72 


8.4000 


.119047 


254.0673 


29.3651 


23 


1.9736 


.506692 


33.4265 


16.4436 


73 


8.6520 


.115580 


262.7193 


29.4807 


24 


2.0328 


.491934 


35.4593 


16.9355 


74 


8.9116 


.112214 


271.6309 


29.5929 


25 


2.0938 


.477606 


37.5530 


17.4131 


75 


9.1789 


. 108945 


280.8098 


29.7018 


26 


2.1566 


.463695 


39.7096 


17.8768 


76 


9.4543 


. 105772 


290.2641 


29.8076 


27 


2.2213 


.450189 


41.9309 


18.3270 


77 


9.7379 


.102691 


300.0020 


29.9103 


28 


2.2879 


.437077 


44.2189 


18.7641 


78 


10.0301 


.099700 


310.0321 


30.0100 


29 


2.3566 


.424346 


46.5754 


19.1885 


79 


10.3310 


.096796 


320.3630 


30.1068 


30 


2.4273 


.411987 


49.0027 


19.6004 


80 


10.6409 


.093977 


331.0039 


30.2008 


31 


2.5001 


.399987 


51.5028 


20.0004 


81 


10.9601 


.091240 


341.9640 


30.2920 


32 


2.5751 


.388337 


54.0778 


20.3888 


82 


11.2889 


.088582 


353.2529 


30.3806 


33 


2.6523 


.377026 


56.7302 


20.7658 


83 


11.6276 


.086002 


364.8805 


30.4666 


34 


2.7319 


.366045 


59.4621 


21.1318 


84 


11.9764 


.083497 


376.857Q 


30.5501 


35 


2.8139 


.355383 


62.2759 


21.4872 


85 


12.3357 


.081065 


389.1927 


30.6312 


36 


2.8983 


.345032 


65.1742 


21.8323 


86 


12.7058 


.078704 


401.8984 


30.7099 


37 


2.9852 


.334983 


68.1594 


22.1672 


87 


13.0870 


.076412 


414.9854 


30.7863 


38 


3.0748 


.325226 


71.2342 


22.4925 


88 


13.4796 


.074186 


428.4650 


30.8605 


39 


3.1670 


.315754 


74.4013 


22.8082 


89 


13.8839 


.072026 


442.3489 


30.9325 




3.2620 


.306557 


77.6633 


23.1148 


90 


14.3005 


.069928 


456.6494 


31.0024 


41 


3.3599 


.297628 


81.0232 


23.4124 


91 


14.7295 


.067891 


471.3789 


31.0703 


42 


3.4607 


.288959 


84.4839 


23.7014 


92 


15.1714 


.065914 


486.5502 


31.1362 


43 


3.5645 


.280543 


88.0484 


23.9819 


93 


15.6265 


.063994 


502.1767 


31.2002 


44 


3.6715 


.272372 


91.7199 


24.2543 


94 


16.0953 


.062130 


518.2720 


31.2623 


45 


3.7816 


.264439 


95.5015 


24.5187 


95 


16.5782 


.060320 


534.8502 


31.3227 


46 


3.8950 


.256737 


99.3965 


24.7754 


96 


17.0755 


.058563 


551.9257 


31.3812 


47 


4.0119 


.249259 


103.4084 


25.0247 


97 


17.5878 


.056858 


569.5135 


31.4381 


48 


4.1323 


.241999 


107.5406 


25.2667 


98 


18.1154 


.055202 


587.6289 


31.4933 


49 


4.2562 


.234950 


111.7969 


25.5017 












50 


4.3839 


.228107 


116.1808 


25.7298 













TABLE XXII. 
INTEREST TABLES, THREE AND ONE-HALF PER CENT. 





d a 

oh . 

a ^^ 


Present Value 
of One Dollar 
Due n Years 
Hence=v x . 


Amount cf One 
Dollar Per An- 
num at End of 
n Years. 


Present Value 
of One Dollar 
Per Annum for 
n Years. 


E 

03 


oh . 

° 03 03 


Present Value 
of One Dollar 
Due n Years 
Hence=v x . 


Amount of One 
Dollar Per An- 
num at End of 
n Years. 


Present Value 
of One Dollar 
Per Annum for 
n Years. 


(1) 
1 


(2) 
1.0350 


(3) 
.966184 


(4) 
1.0350 


(5) 
.9662 


(6) 
51 


(7) 
5.7804 


(8) 
. 172998 


(9) 
141.3632 


(10) 
23.6286 


2 


1.0712 


.933511 


2 . 1062 


1.8997 


52 


5.9827 


.167148 


147.3459 


23.7957 


3 


1.1087 


.901943 


3.2149 


2.8016 


53 


6.1921 


.161496 


153.5381 


23.9572 


4 


1 . 1475 


.871443 


4.3625 


3.6731 


54 


6.4088 


. 156035 


159.9469 


24.1133 


5 


1.1877 


.841972 


5.5502 


4.5151 


55 


6.6331 


. 150758 


166.5800 


24.2640 


6 


1.2293 


.813500 


6.7794 


5.3286 


56 


6.8653 


. 145660 


173.4453 


24.4097 


7 


1.2723 


.785991 


8.0517 


6.1145 


57 


7.1056 


.140734 


180.5509 


24.5504 


8 


1.3168 


.759410 


9.3685 


6.8740 


58 


7.3543 


.135975 


187.9052 


24.6864 


9 


1.3629 


.733731 


10.7314 


7.6077 


59 


7.6117 


.131377 


195.5169 


24.8178 


10 


1.4106 


.708920 


12.1420 


8.3166 


60 


7.8781 


. 126934 


203.3950 


24.9447 


11 


1.4600 


.684945 


13.6020 


9.0016 


61 


8.1538 


. 122642 


211.5488 


25.0674 


12 


.1.5111 


.661783 


15.1131 


9.6633 


62 


8.4392 


.118495 


219.9880 


25.1858 


13 


1.5640 


.639403 


16.6770 


10.3027 


63 


8.7346 


.114487 


228.7226 


25.3003 


14 


1.6187 


.617781 


18.2957 


10.9205 


64 


9.0403 


.110616 


237.7629 


25.4110 


15 


1.6753 


.596890 


19.9710 


11.5174 


65 


9.3567 


. 106875 


247.1196 


25.5178 


16 


1 7340 


.576692 


21.7050 


12.0941 


66 


9.6842 


. 103261 


256.8038 


25.6211 


17 


1.7947 


.557204 


23.4997 


12.6513 


67 


10.0231 


.099769 


266.8269 


25.7209 


18 


1.8575 


.538361 


25.3572 


13.1897 


68 


10.3739 


.096395 


277.2008 


25.8173 


19 


1.9225 


.520155 


27.2797 


13.7098 


69 


10.7370 


.093136 


287.9379 


25.9104 


20 


1.9898 


.502566 


29.2695 


14.2124 


70 


11.1128 


.089986 


299.0507 


26.0004 


21 


2.0594 


.485571 


31.3289 


14.6980 


71 


11.5018 


.086943 


310.5525 


26.0873 


22 


2.1315 


.469151 


33.4604 


15.1671 


72 


11.9043 


.084003 


322.4568 


26.1713 


23 


2.2061 


.453286 


35.6665 


15.6204 


73 


12.3210 


.081162 


334.7778 


26.2525 


24 


2.2833 


.437957 


37.9499 


16.0583 


74 


12.7522 


.078418 


347.5300 


26.3309 


25 


2.3632 


.423147 


40.3131 


16.4815 


75 


13.1985 


.075766 


360.7286 


26.4067 


26 


2.4460 


.408838 


42.7591 


16.8903 


76 


13.6605 


.073204 


374.3891 


26.4799 


27 


2.5316 


.395012 


45.2907 


17.2853 


77 


14.1386 


.070728 


388.5277 


26.5506 


28 


2.6202 


.381654 


47.9108 


17.6670 


78 


14.6335 


.068337 


403.1611 


26.6189 


29 


2.7119 


.368748 


50.6227 


18.0357 


79 


15.1456 


.066026 


418.3068 


26.6850 


30 


2.8068 


.356278 


53.4295 


18.3920 


80 


15.6757 


.063793 


433.9825 


26.7488 


31 


2.9050 


.344230 


56.3345 


18.7363 


81 


16.2244 


.061636 


450.2069 


26.8104 


32 


3.0067 


.332590 


59.3412 


19.0688 


82 


16.7923 


.059551 


466.9992 


26.8700 


33 


3.1119 


.321343 


62.4532 


19.3902 


83 


17.3800 


.057538 


484.3791 


26.9275 


34 


3.2209 


.310476 


65.6740 


19.7007 


84 


17.9883 


.055592 


502.3674 


26.9831 


35 


3.3336 


.299977 


69.0076 


20.0006 


85 


18.6179 


.053712 


520.9853 


27.0368 


36 


3.4503 


.289833 


72.4579 


20.2905 


86 


19.2695 


.051896 


540.2547 


27.0887 


37 


3.5710 


.280032 


76.02S9 


20.5705 


87 


19.9439 


.050141 


560.1987 


27.1388 


38 


3.6960 


.270562 


79.7249 


20.8411 


88 


20.6420 


.048445 


580.8406 


27.1873 


39 


3.S254 


.261413 


83.5503 


21.1025 


89 


21.3644 


.046807 


602.2050 


27.2341 


40 


3.9593 


.252572 


87.5096 


21.3551 


90 


22.1122 


.045224 


624.3172 


27.2793 


41 


4.0978 


.244031 


91.6074 


21.5991 


91 


22.8861 


.043695 


647.2033 


27.3230 


42 


4.2413 


.235779 


95.8487 


21.8349 


92 


23.6871 


.042217 


670.8904 


27.3652 


43 


4.3897 


.227806 


100.2384 


22.0627 


93 


24.5162 


.040789 


695.4066 


27.4060 


44 


4.5433 


.220102 


MM. 7817 


22.2828 


94 


25.3742 


.039410 


720.7808 


27.4454 


45 


4.7024 


.212659 


109.4840 


22.4954 


95 


26.2623 


.038077 


747.0431 


27.4835 


46 


4.8669 


.205468 


114.3510 


22.7009 


96 


27.1816 


.036790 


774.2247 


27.5203 


47 


5.0373 


. 198520 


119.3883 


22.8994 


97 


28.1329 


.035546 


802.3575 


27.5558 


48 


5.2136 


. 191806 


124.6018 


23.0912 


98 


29.1175 


.034344 


831.4750 


27.5902 


49 


5.3961 


. 185320 


129.9979 


23.2765 












50 


5.5849 


. 179053 


135.5828 


23.4556 













TABLE XXIII. 
INTEREST TABLES, FOUR PER CENT. 





a>-rt 


JJS 


a> i<h 


O M U, 




CJ-rt 


QJ U. rn 


<U ' «*- 


o U U 




a a 


a a o 


_2 — «S 




c a 


.3-3 & 


a a o 


3 -2t2 




Oh . 




O^T3 






Ow . 


"rt^ *> u' 


Cxi-a 


"c3"rt r- 




o"g £ 

-Is* 


_ <u a 1 1 

go.! 

oo 3 S3 

r° pw 




l* oPh d 
P-t 


B 


o"S eS 

is- 




^P^ * 




(l) 


(2) 


(3) 


(4) 


(5) 


(6) 


(7) 


(8) 


(9) 


(10) 


1 


1.0400 


.961538 


1.0400 


.9615 


51 


7.3910 


.135301 


166.1647 


21.6175 


2 


1.0816 


.924556 


2.1216 


1.8861 


52 


7.6866 


.130097 


173.8513 


21.7476 


3 


1.1249 


.888996 


3.2465 


2.7751 


53 


7.9941 


.125093 


181.8454 


21.8727 


4 


1 . 1699 


.854804 


4.4163 


3.6299 


54 


8.3138 


.120282 


190.1592 


21.9930 


5 


1.2167 


.821927 


5.6330 


4.4518 


55 


8.6464 


.115656 


198.8055 


22.1086 


6 


1.2653 


.790315 


6.8983 


5.2421 


56 


8.9922 


.111207 


207.7978 


22.2198 


7 


1.3159 


.759918 


8.2142 


6.0021 


57 


9.3519 


.106930 


217.1497 


22.3267 


8 


1.3686 


.730690 


9.5828 


6.7327 


58 


9.7260 


.102817 


226.8757 


22.4296 


9 


1.4233 


.702587 


11.0061 


7.4353 


59 


10.1150 


.098863 


236.9907 


22.5284 


10 


1.4802 


.675564 


12.4864 


8.1109 


60 


10.5196 


.095060 


247.5103 


22.6235 


11 


1.5395 


.649581 


14.0258 


8.7605 


61 


10.9404 


.091404 


258.4507 


22.7149 


12 


1.6010 


.624597 


15.6268 


9.3851 


62 


11.3780 


.087889 


269.8288 


22.8028 


13 


1.6651 


.600574 


17.2919 


9.9856 


63 


11.8332 


.084508 


281.6619 


22.8873 


14 


1.7317 


.577475 


19.0236 


10.5631 


64 


12.3065 


.081258 


293.9684 


22.9685 


15 


1.8009 


.555265 


20.8245 


11.1184 


65 


12.7987 


.078133 


306.7671 


23.0467 


16 


1.8730 


.533908 


22.6975 


11.6523 


66 


13.3107 


.075128 


320.0778 


23.1218 


17 


1.9479 


.513373 


24.6454 


12.1657 


67 


13.8431 


.072238 


333.9209 


23 . 1940 


18 


2.0258 


.493628 


26.6712 


12.6593 


68 


14.3968 


.069460 


348.3177 


23.2635 


19 


2.1068 


.474642 


28.7781 


13.1339 


69 


14.9727 


.066788 


363.2905 


23.3303 


20 


2.1911 


.456387 


30.9692 


13.5903 


70 


15.5716 


.064219 


378.8621 


23.3945 


21 


2.2788 


.438834 


33.2480 


14.0292 


71 


16.1945 


.061749 


395.0566 


23.4563 


22 


2.3699 


.421955 


35.6179 


14.4511 


72 


16.8423 


.059374 


411.8988 


23.5156 


23 


2.4647 


.405726 


38.0826 


14.8568 


73 


17.5160 


.057091 


429.4148 


23.5727 


24 


2.5633 


.390121 


40.6459 


15.2470 


74 


18.2166 


.054895 


447.6314 


23.6276 


25 


2.6658 


.375117 


43.3117 


15.6221 


75 


18.9453 


.052784 


466.5766 


23.6804 


26 


2.7725 


.360689 


46.0842 


15.9828 


76 


19.7031 


.050754 


486.2797 


23.7312 


27 


2.8834 


.346817 


48.9676 


16.3296 


77 


20.4912 


.048801 


506.7709 


23.7800 


28 


2.9987 


.333477 


51.9663 


16.6631 


78 


21.3108 


.046924 


528.0817 


23.8269 


29 


3.1187 


.320651 


55.0849 


16.9837 


79 


22.1633 


.045120 


550.2450 


23.8720 


30 


3.2434 


.308319 


58.3283 


17.2920 


80 


23.0498 


.043384 


573.2948 


23.9154 


31 


3.3731 


.296460 


61.7015 


17.5885 


81 


23.9718 


.041716 


597.2666 


23.9571 


32 


3.5081 


.285058 


65.2095 


17.8736 


82 


24.9307 


.040111 


622 . 1972 


23.9972 


33 


3.6484 


.274094 


68.8579 


18.1476 


83 


25.9279 


.038569 


648.1251 


24.0358 


34 


3.7943 


.263552 


72.6522 


18.4112 


84 


26.9650 


.037085 


675.0901 


24.0729 


35 


3.9461 


.253415 


76.5983 


18.6646 


85 


28.0436 


.035659 


703.1337 


24.1085 


36 


4.1039 


.243669 


80.7022 


18.9083 


86 


29.1653 


.034287 


732.2991 


24.1428 


37 


4.2681 


.234297 


84.9703 


19.1426 


87 


30.3320 


.032969 


762.6310 


24.1758 


38 


4.4388 


.225285 


89.4091 


19.3679 


88 


31.5452 


.031701 


794.1763 


24.2075 


39 4.6164 


.216621 


94.0255 


19.5845 


89 


32.8071 


.030481 


826.9833 


24.2380 


40 


4.8010 


.208289 


98.8265 


19.7928 


90 


34.1193 


.029309 


861 . 1027 


24.2673 


41 


4.9931 


.200278 


103.8196 


19.9931 


91 


35.4841 


.028182 


896.5868 


24.2955 


42 


5.1928 


.192575 


109.0124 


20.1856 


92 


36.9035 


.027098 


933.4902 


24.3226 


43 


5.4005 


.185168 


114.4129 


20.3708 


93 


38.3796 


.026056 


971.8699 


24.3486 


44 


5.6165 


.178046 


120.0294 


20.5488 


94 


39.9148 


.025053 


1011.7846 


24.3737 


45 


5.8412 


.171198 


125.8706 


20.7200 


95 


41.5114 


.024090 


1053.2960 


24.3978 


46 


6.0748 


.164614 


131.9454 


20.8847 


96 


43.1718 


.023163 


1096.4679 


24.4209 


47 


6.3178 


.158283 


138.2632 


21.0429 


97 


44.8987 


.022272 


1141.3666 


24.4432 


48 


6.5705 


.152195 


144.8337 


21.1951 


98 


46.6947 


.021416 


1188.0613 


24.4646 


49 


6.8333 


.146341 


151.6671 


21.3415 












50 


7.1067 


.140713 


158 7738 


21.4822 















COMBINED MORTALITY AND DISABILITY TABLE XXIV. 


National Fraternal Congress Table of Mortality and Fraternal Society Total and Permanent 


Disability Experience. 


Age 


q* 


i x 


log. i x 


q x 


18 


.00500 


.00012 


4.07918 


.00512 


19 


.00500 


.00012 


.07918 


.00512 


20 


.00500 


.00012 


.07918 


.00512 


21 


.00504 


.00013 


.11394 


.00517 


22 


.00507 


.00015 


.17609 


.00522 


23 


.00511 


.00018 


.25527 


.00529 


24 


.00515 


.00021 


.32222 


.00536 


25 


.00520 


.00025 


.39794 


.00545 


26 


.00526 


.00029 


.46240 


.00555 


27 


.00532 


.00032 


.50515 


.00564 


28 


.00539 


.00034 


.53148 


.00573 


29 


.00547 


.00035 


.54407 


.00582 


30 


.00555 


.00037 


.56820 


.00592 


31 


.00565 


.00038 


.57978 


.00603 


32 


.00575 


.00039 


.59106 


.00614 


33 


.00587 


.00041 


.61278 


.00628 


34 


.00600 


.00044 


.64345 


.00644 


35 


.00615 


.00048 


.68124 


.00663 


36 


.00631 


.00052 


.71600 


.00683 


37 


.00649 


.00056 


.74819 


.00705 


38 


.00670 


.00061 


.78533 


.00731 


39 


.00692 


.00065 


.81291 


.00757 


40 


.00717 


.00069 


.83885 


.00786 


41 


.00745 


.00073 


.86332 


.00818 


42 


.00777 


.00077 


.88649 


.00854 


43 


.00811 


.00082 


.91381 


.00893 


44 


.00848 


.00086 


.93450 


.00934 


45 


.00887 


.00090 


.95424 


.00977 


46 


.00929 


.00094 


.97313 


.01023 


47 


.00975 


.00099 


.99564 


.01074 


48 


.01027 


.00105 


3.02119 


.01132 


49 


.01082 


.00113 


.05308 


.01195 


50 


.01144 


.00124 


.09342 


.01268 


51 


.01215 


.00139 


.14301 


.01354 


52 


.01290 


.00157 


. 19590 


.01447 


53 


.01375 


.00179 


.25285 


.01554 


54 


.01468 


.00210 


.32222 


.01678 


55 


.01571 


.00255 


.40654 


.01826 


56 


.01686 


.00321 


.50651 


.02007 


57 


.01812 


.00407 


.60959 


.02219 


58 


.01950 


.00504 


.70243 


.02454 


59 


.02105 


.00646 


.91023 


.02751 


60 


.02275 


.00830 


• .91908 


.03105 


61 


.02464 


.01035 


2.01494 


.03499 


62 


.02672 


.01290 


.11059 


.03962 


63 


.02903 


.01645 


.21617 


.04548 


64 


.03157 


.02200 


.34242 


.05357 


65 


.03439 


.02955 


.47056 


.06394 


66 


.03752 


.04010 


.60314 


.07762 


67 


.04096 


.05465 


.73759 


.09561 


68 


.04478 


.07420 


.87040 


.11898 


69 


.04898 


.09975 


.99891 


.14873 


70 


.05365 


.13230 


1.12156 


. 18595 


71 


.05881 


.17285 


.23767 


.23166 


72 


.06449 


.22240 


.34713 


.28689 


73 


.07081 


.28195 


.45017 


.35276 


74 


.07778 


.35250 


.54716 


.43028 


75 


.08548 


.43505 


.03854 


.52053 


76 


.09399 


.52060 


.71650 


.61459 


77 


.10340 


.62015 


.79250 


.72355 


78 


.11384 


.73470 


.86611 


.84854 


79 


.12535 


.85345 


.93118 


1.00000 

: 


i x = Probability of becoming totally and permanen 


tly disabled, 
notation. See text. 





COMBINED MORTALITY AND DISABILITY TABLE XXV. 

National Fraternal Congress Table of Mortality and Fraternal Society Total and Permanent 

Disability Experience. 



Age 


a l 


log. a lx 


d 1 

X 


log. d^ 


n x 


log. % 


18 ' 


100000 


5.00000 


512 


2.70927 


12 


1.07918 


19 


99488 


4.99777 


509 


.70672 


12 


.07695 


20 


98979 


.99554 


507 


.70501 


12 


.07472 


21 


98472 


.99331 


509 


.70672 


13 


.10725 


22 


97963 


.99106 


511 


.70842 


15 


.16715 


23 


97452 


.98879 


516 


.71265 


IS 


.24406 


24 


96936 


.98649 


520 


.71600 


20 


.30871 


25 


96416 


.98415 


525 


.72016 


24 


.38209 


26 


95891 


.98178 


532 


.72591 


28 


.44418 


27 


95359 


.97936 


538 


.73078 


31 


.48451 


28 


94821 


.97690 


543 


.73480 


32 


.50838 


29 


94278 


.97441 


549 


.73957 


33 


.51S48 


30 


93729 


.97187 


555 


.74429 


35 


.54007 


31 


93174 


.96929 


562 


.74974 


35 


.54907 


32 


92612 


.96667 


569 


.75511 


36 


.55773 


33 


92043 


.96399 


578 


.76193 


38 


.57677 


34 


91465 


.96125 


. 589 


.77012 


40 


.60470 


35 


90876 


.95845 


603 


.78032 


44 


.63969 


36 


90273 


.95556 


617 


.79029 


47 


.67156 


37 


89656 


.95258 


632 


.80072 


50 


.70077 


38 


89024 . 


.94951 


651 


.81358 


54 


.73484 


39 


88373 


.94632 


669 


.82543 


57 


.75923 


40 


S7704 


.94302 


689 


.83022 


61 


.78187 


41 


87015 


.93959 


712 


.85248 


64 


.80291 


42 


86303 


.93603 


737 


.86747 


66 


.82252 


43 


85566 


.93230 


764 


.88309 


70 


.84611 


44 


84802 


.92841 


792 


.89873 


73 


.86291 


45 


84010 


.92433 


821 


.91434 


76 


.87857 


46 


83189 


.92007 


851 


.92993 


78 


.89320 


47 


82338 


.91560 


884 


.94645 


82 


.91124 


48 


81454 


.91091 


922 


.96473 


86 


.93210 


49 


80532 


.90597 


962 


.98318 


91 


.95905 


50 


79570 


.90075 


1009 


3.00389 


99 


.99417 


51 


78561 


.89521 


1064 


.02694 


109 


2.03822 


52 


77497 


.88928 


1121 


.04961 


122 


.08518 


53 


76376 


.88296 


1187 


.07445 


137 


. 13581 


54 


75189 


.87615 


1262 


.10106 


158 


. 19837 


55 


73927 


.86880 


1350 


.13033 


189 


.27534 


56 


72577 


.86080 


1457 


.16346 


233 


.36731 


57 


71120 


.85199 


1578 


.19811 


289 


.46158 


58 


69542 


.84225 


1707 


.23223 


351 


.54468 


59 


67835 


.83145 


1866 


.27091 


438 


.64168 


60 


65969 


.81934 


2048 


.31133 


548 


.73842 


61 


63921 


.80564 


2237 


.34967 


662 


.82058 


62 


61684 


.79017 


2444 


.38810 


796 


.90076 


63 


59240 


.77262 


2694 


.43040 


975 


.98879 


64 


56546 


.75240 


3029 


.48130 


1244 


3.09482 


65 


53517 


.72849 


3422 


.53428 


1581 


.19905 


66 


50095 


.69979 


3888 


.58973 


2009 


.30293 


67 


46207 


.66471 


4418 


.64523 


2525 


.40230 


68 


41789 


.62106 


4973 


.69662 


3101 


.49157 


69 


36816 


.56604 


5475 


.73838 


3672 


.56495 


70 


31341 


.49611 


5829 


.76559 


4146 


.61767 


71 


25512 


.40674 


5911 


.77166 


4410 


.64441 


72 


19601 


.29228 


5624 


.75005 


4359 


.63941 


73 


13977 


.14541 


4931 


.69294 


3941 


.59558 


74 


9046 


3.95646 


3890 


.58995 


3189 


.50362 


75 


5156 


.71231 


2686 


.42911 


2243 


.35085 


76 


2470 


.39270 


1519 


.18156 


1286 


.10920 


77 


951 


2.97818 


689 


2.83822 


590 


2.77068 


78 


262 


.41830 


222 


.34635 


193 


.28441 


79 


40 


1.60206 


40 


1.60206 


34 


1.53324 



a l x = Active, or premium paying members. 

d 1 x = a lx — a l x +i, number dying and number totally and permanently disabled at age x out of 



COMMUTATION COLUMNS— TABLE XXVI. 

(Death Benefit or Total and Permanent Disability Benefit.) 
National Fraternal Congress Table of Mortality and Fraternal Society Total and Permanent 
Disability Experience and 4 per cent. 



Age 


a D x 


a N x 


c x 


Ml 


18 


49363 


994246 


243.02 


11122.59 


19 


47222 


944883 


232.30 


10879.57 


20 


45172 


897661 


222.49 


10647.27 


21 


43213 


852489 


214.78 


10424.78 


22 


41336 


809276 


207.32 


10210.00 


23 


39538 


767940 


201.30 


10002.68 


24 


37817 


728402 


195.06 


9801.38 


25 


36168 


690585 


189.36 


9606.32 


26 


34587 


654417 


184.51 


9416.96 


27 


33072 


619830 


179.41 


9232.45 


28 


31621 


586758 


174.11 


9053.04 


29 


30230 


555137 


169.27 


8878.93 


30 


28898 


524907 


164.54 


8709.66 


31 


27622 


496009 


160.20 


8545.12 


32 


26400 


468387 


155.96 


8384.92 


33 


25228 


441987 


152.34 


8228.96 


34 


24106 


416759 


149.26 


8076.62 


35 


23029 


392653 


146.93 


7927.36 


36 


21997 


369624 


144.56 


7780.43 


37 


21006 


347627 


142.38 


7635.87 


38 


20056 


326621 


141; 02 


7493.49 


39 


19143 


306565 


139.35 


7352.47 


40 


18268 


287422 


137.99 


7213.12 


41 


17427 


269154 


137.11 


7075.13 


42 


16620 


251727 


136.47 


6938.02 


43 


15844 


235107 


136.03 


6801.55 


44 


15099 


219263 


135.59 


6665.52 


45 


14382 


204164 


135.15 


6529.93 


46 


13694 


189782 


134.70 


6394.78 


47 


13033 


176088 


134.54 


6260.08 


48 


12397 


163055 


134.93 


6125.54 


49 


11785 


150658 


135.37 


5990.61 


50 


11196 


138873 


136.51 


5855.24 


51 


10629 


127677 


138.42 


5718.73 


52 


10082 


117048 


140.23 


5580.31 


53 


9554.1 


106966 


142.77 


5440.08 


54 


9043.8 


97411.9 


145.96 


5297.31 


55 


8550.1 


88368.1 


150.13 


5151.35 


56 


8071.0 


79818.0 


155.80 


5001.22 


57 


7604.8 


71747.0 


162.25 


4845.42 


58 


7150.2 


64142.2 


168.76 


4683.17 


59 


6706.3 


56992.0 


177.38 


4514.41 


60 


6271.0 


50285.7 


187.20 


4337.03 


61 


5842.7 


44014.7 


196.61 


4149.83 


62 


5421.3 


38172.0 


206.54 


3953.22 


63 


5006.3 


32750.7 


218.91 


3746.68 


64 


4594.8 


27744.4 


236.66 


3527.77 


65 


4181.4 


23149.6 


257.09 


3291.11 


66 


3763.5 


18968.2 


280.87 


3034.02 


67 


3338.0 


15204.7 


306.87 


2753.15 


68 


2903.4 


11866.7 


332.14 


2446.28 


69 


2458.9 


8963.3 


351.60 


2114.14 


70 


2012.7 


6504.4 


359.93 


1762.54 


71 


1575.3 


4491.75 


350.96 


1402.61 


72 


1163.8 


2916.45 


321.09 


1051.65 


73 


797.96 


1752.55 


270.69 


730.56 


74 


496.58 


954.59 


205.33 


459.87 


75 


272.15 


458.01 


136.33 


254.54 


76 


125.36 


185.86 


74.129 


118.212 


77 


46.41 


60.509 


32.331 


44.083 


78 


12.294 


14.099 


10.017 


11.752 


79 


1.805 


1.805 


1.735 


1.735 




*D x = v-U 




C'=v x+1 


dL. 



COMMUTATION COLUMNS— TABLE XXVII. 

(Death Benefit or Total and Permanent Disability Benefit.) 
National Fraternal Congress Table of Mortality and Fraternal Society Total and Permanent 

Disability Experience and 4 per cent. 



Age 


a D I2 


a X 12 

X 


C 'I2 

X 


M'" 

X 


18 


4S292.5 


969504 


247.83 


11343.25 


19 


46197.0 


921272 


236.90 


11095.42 


20 


44192.5 


87507.") 


226.90 


10858.52 


21 


42274.5 


830882 


219.03 


10631.62 


22 


40437.0 


788608 


211.43 


10412.59 


23 


3S677.5 


74S171 


205.29 


10201.16 


24 


36992.5 


709493 


198.93 


9995.87 


25 


35377.5 


672500 


193.11 


9796.94 


26 


33829.5 


637123 


188.16 


9603.83 


27 


32346.5 


603294 


1S2.97 


9415.67 


28 


30925.5 


570947 


177.56 


9232.70 


29 


29564.0 


540022 


172.62 


9055.14 


30 


2S260.0 


510458 


167.80 


8882.22 


31 


27011.0 


482198 


163.38 


8714.42 


32 


25814.0 


455 1S7 


159.05 


8551.04 


33 


24667.0 


429373 


155.35 


8391.99 


34 


23567.5 


404706 


152.22 


8236.64 


35 


22513.0 


381138 


149.84 


8084.42 


36 


21501.5 


358625 


147.43 


7934.58 


37 


20531.0 


337124 


145.20 


7787.15 


38 


19599.5 


316593 


143.81 


7641.95 


39 


1S705.5 


296993 


142.11 


7498.14 


40 


17847.5 


27S288 


140.72 


7356.03 


41 


17023.5 


260440 


139.83 


7215.31 


42 


16232.0 


243417 


139.17 


7075.48 


43 


15471.5 


2271S5 


138.72 


6936.31 


44 


14740.5 


211713 


138.28 


6797.59 


45 


14038.0 


196973 


137.83 


6659.31 


46 


13363.5 


182935 


137.37 


6521.48 


47 


12715.0 


169571 


137.21 


6384.11 


48 


12091.0 


156856 


137.60 


6246.90 


49 


11490.5 


144765 


138.05 


6109.30 


50 


10912.5 


133275 


139.22 


5971.25 


51 


10355.5 


122363 


141.17 


5832.03 


52 


9818.05 


112007 


143.01 


5690.86 


53 


9298.95 


102189 


145.60 


5547.85 


54 


8796.95 


92890 


148.85 


5402.25 


55 


8310.55 


84093 


153.10 


5253.40 


56 


7837.90 


75782.5 


158.88 


5100.30 


57 


7377.50 


67944.6 


165.46 


4941.42 


58 


6928.25 


60567 . 1 


172.10 


4775.96 


59 


6488.65 


53638.8 


180.90 


4603.86 


60 


6056.85 


47150.2 


190.91 


4422.96 


61 


5632.60 


41093.3 


200.50 


4232.05 


62 


5213.80 


35461.3 


210.63 


4031.55 


63 


4S00.55 


30247.5 


223.25 


3820.92 


64 


4388.10 


25446.0 


241.35 


3597.67 


65 


3972.45 


21058.9 


262.18 


3356.32 


66 


3550.75 


17086.4 


286.43 


3094.14 


67 


3120.70 


13535.7 


312.95 


2807.71 


68 


2681.15 


10415.0 


338.72 


2494.76 


69 


2235.80 


7733. SI 


35S.57 


2156.04 


70 


1794.00 


5498.01 


367.06 


1797.47 


71 


1369.55 


3704.01 


357.92 


1430.41 


72 


980. SS 


2334.46 


327.45 


1072.49 


73 


647.27 


1353.58 


276.05 


745.04 


74 


384.365 


706. 30S 


209.40 


468.99 


75 


198.755 


321.943 


139.03 


259.59 


76 


85.885 


123.188 


75.598 


120.555 


77 


29.352 


37.303 


32.972 


44.957 


78 


7.049 


7.951 


10.215 


11.985 


79 


.902 


.902 


1.770 


1.770 




(£»-**•■ N£. 




a D - = &D ^ 


a D x+1 




AT ,I2 =^r 12 




X 


2 



a N x 2 = 2 a D 



12 



COMMUTATION COLUMNS— TABLE XXVIII. 

(Total and Permanent Disability Benefit not in Combination with a Death Benefit.) 
National Fraternal Congress Table of Mortality and Fraternal Society Total and Permanent 

Disability Experience and 4 per cent. 



Age 


*c x 


log. *C X 


>M X 


log. *M X 


18 


5.70 


0.75555 


3151.95 


3.49859 


19 


5.45 


.73628 


3146.25 


.49780 


20 


5.21 


.71702 


3140.80 


.49704 


21 


5.40 


.73252 


3135.59 


.49632 


22 


5.96 


.77538 


3130.19 


.49557 


23 


6.84 


.83526 


3124.23 


.49474 


24 


7.64 


.88288 


3117.39 


.49379 


25 


8.69 


.93922 


3109.75 


.49273 


26 


9.65 


.98428 


3101.06 


.49152 


27 


10.18 


1.00758 


3091.41 


.49016 


28 


10.34 


.01441 


3081.23 


.48872 


29 


10.17 


.00748 


3070.89 


.48727 


30 


10.28 


.01204 


3060.72 


.48582 


31 


10.09 


.00400 


3050.44 


.48436 


32 


9.90 


0.99563 


3040.35 


.48293 


33 


9.95 


.99764 


3030.45 


.48151 


34 


10.20 


1.00853 


3020.50 


.48008 


35 


10.63 


.02649 


3010.30 


.47861 


36 


11.00 


.04133 


2999.67 


.47708 


37 


11.31 


.05350 


2988.67 


.47548 


38 


11.76 


.07054 


2977.36 


.47384 


39 


11.97 


.07790 


2965.60 


.47211 


40 


12.12 


.08350 


2953.63 


.47035 


41 


12.23 


.08751 


2941.51 


.46857 


42 


12.31 


.09009 


2929.28 


.46676 


43 


12.49 


.09664 


2916.97 


.46494 


44 


12.49 


.09641 


2904.48 


.46307 


45 


12.45 


.09504 


2891.99 


.46120 


46 


12.38 


.09263 


2879.54 


.45932 


47 


12.41 


.09364 


2867.16 


.45746 


48 


12.52 


.09747 


2854.75 


.45558 


49 


12.81 


.10738 


2842.23 


.45365 


50 


13.35 


.12547 


2829.42 


.45169 


51 


14.21 


. 15249 


2816.07 


.44965 


52 


15.22 


.18241 


2801.86 


.44745 


53 


16.44 


.21601 


2786.64 


.44507 


54 


18.26 


.26154 


2770.20 


.44251 


55 


20.97 


.32147 


2751.94 


.43963 


56 


24.91 


.39641 


2730.97 


.43632 


57 


29.77 


.47365 


2706.06 


.43234 


58 


34.65 


.53971 


2676.29 


.42753 


59 


41.66 


.61968 


2641.64 


.42187 


60 


50.05 


.69939 


2599.98 


.41487 


61 


58.14 


.76451 


2549.93 


.40652 


62 


67.25 


.82766 


2491.79 


.39651 


63 


79.20 


.89866 


2424.54 


.38462 


64 


97.21 


.98765 


2345.34 


.37020 


65 


118.81 


2.07485 


2248.13 


.35182 


66 


145.11 


.16170 


2129.32 


.32824 


67 


175.40 


.24403 


1984.21 


.29759 


68 


207.14 


.31627 


1808.81 


.25739 


69 


235.84 


.37262 


1601.67 


.20458 


70 


256.04 


.40830 


1365.83 


.13539 


71 


261.82 


.41801 


1109.79 


.04524 


72 


248.88 


.39598 


847.97 


2.92838 


73 


216.33 


.33511 


599.09 


.77749 


74 


168.31 


.22612 


382.76 


.58293 


75 


113.85 


.05632 


214.45 


.33133 


76 


62.75 


1.79763 


100.60 


.00260 


77 


27.68 


.44208 


37.85 


1.57807 


78 


8.69 


0.93878 


10.17 


.00732 


79 


1.48 


.17057 


1.48 


0.17026 



iC x = V x+1 *fc. 



COMMUTATION COLUMNS— LOGARITHMS— TABLE XXIX. 

(Death Benefit or Total and Permanent Disability Benefit.) 
National Fraternal Congress Table of Mortality and Fraternal Society Total and Perma- 
nent Disability Experience and 4 Per Cent. 



Age. 


log. a D x 


log. a D 12 

X 


log. a N x 


log. a N* 2 


u>g.c; 


log. M' 

X 


18 


4.69340 


4.68388 


5.99750 


5.98657 


2.38564 


4.04622 


19 


.67414 


.66461 


.97538 


.96439 


.36605 


.03003 


20 


.65487 


.64535 


.95311 


.94204 


.34731 


,02723 


21 


.63561 


.62608 


.93069 


.91954 


.33199 


.01808 


22 


.61633 


.60678 


.90810 


.89636 


.31J65 


.00903 


23 


.59702 


.58746 


.88533 


.87400 


.3058.) 


.00013 


24 


.57760 


.56812 


.86237 


.85095 


.29017 


3.99129 


25 


.55832 


.54873 


.83921 


.82709 


.27729 


.98256 


26 


.53891 


.52930 


.81586 


.80422 


.26601 


.97391 


27 


.51946 


.50983 


.79227 


.78053 


.25385 


.96532 


28 


.49997 


.49032 


.76846 


.75660 


.24083 


.95679 


29 


.48044 


.47076 


.74440 


.73241 


.22857 


.94830 


. 30 


.46087 


.45117 


.72008 


.70790 


.21626 


.94000 


31 


.44126 


.43154 


.69549 


.68323 


.20467 


.93172 


32 


.42160 


.41186 


.67061 


.65819 


.19301 


.92350 


33 


.40189 


.39212 


.64541 


.63283 


.18280 


.91535 


34 


.38212 


.37232 


.61989 


.60714 


.17395 


.90723 


35 


.36228 


.35243 


.59401 


.58108 


.16712 


.89913 


36 


.34236 


.33248 


.56776 


.55465 


.16006 


.89100 


37 


.32235 


.31241 


.54112 


.52778 


.15345 


.88286 


38 


.30224 


.29226 


.51404 


.50050 


.14928 


.87468 


39 


.28202 


.27198 


.48652 


.47274 


.14410 


.86644 


40 


.26169 


.25159 


.45852 


.44450 


.13985 


.85812 


41 


.24122 


.23106 


.42999 


.41571 


.13708 


.84973 


42 


.22063 


.21037 


.40094 


.38636 


.13504 


.84123 


43 


. 19987 


.18955 


.37127 


.35637 


.13362 


.83261 


44 


.17894 


.16853 


.34096 


.32574 


.13223 


.82383 


45 


. 15783 


.14731 


.30997 


.29440 


.13081 


.81491 


46 


.13654 


.12594 


.27825 


.26228 


.12936 


.80583 


47 


.11503 


.10432 


.24573 


.22935 


.12885 


.79658 


48 


.09331 


.08246 


.21232 


.19551 


.13010 


.78714 


49 


.07134 


.06036 


.17800 


.16062 


.13151 


.77747 


50 


.04908 


.03794 


.14261 


.12473 


.13519 


.76754 


51 


.02651 


.01519 


.10612 


.08764 


.14121 


.75730 


52 


.00355 


3.99203 


.06837 


.04926 


.14684 


.74000) 


53 


3.98019 


.96844 


.02926 


.00941 


.15455 


.73561 


54 


.95635 


.94433 


4.98861 


4.96797 


.16423 


.72405 


55 


.93197 


.91963 


.94630 


.92476 


.17646 


.71193 


56 


.90693 


.89420 


.90210 


.87957 


.19256 


.69907 


57 


.88109 


.86791 


.85580 


.83216 


.21018 


.68533 


58 


.85432 


■ .84063 


.80714 


.78224 


.22726 


.67054 


59 


.82648 


.81216 


.75581 


.72948 


.24891 


.65460 


60 


.79734 


.78225 


.70145 


.67348 


.27230 


.63719 


61 


.76661 


.75066 


.64360 


.61377 


.29360 


.61803 


62 


.73410 


.71715 


.58174 


.54975 


.31500 


.59695 


63 


.69952 


.68130 


.51522 


.48070 


.34027 


.57365 


64 


.06227 


.64228 


.44317 


.40564 


.37413 


.54750 


65 


.02132 


.59900 


.36455 


.32344 


.41008 


.51734 


66 


.57559 


.55033 


.27802 


.23204 


.44850 


.48202 


07 


.52348 


.49425 


.18199 


.13149 


.48696 


.43984 


68 


.46290 


.42833 


.07434 


.01700 


.52132 


.38851 


69 


.39074 


.34943 


3.95247 


3.SSS39 


.54605 


.32513 


70 


.30378 


.25382 


.81321 


.74020 


.55022 


.24613 


71 


. 19737 


. 13059 


.65241 


.56867 


.54520) 


.14693 


72 


.06588 


2.99162 


.46485 


.30819 


.5000)2 


.02189 


73 


2.90198 


.81109 


.24308 


.13149 


.43247 


2.86366 


74 


.69599 


.58475 


2.97982 


2.84900 


.31245 


.00264 


75 


.43481 


.29833 


.00088 


.50777 


.13458 


.40570) 


76 


.09817 


1.93392 


.26921 


.09058 


1.86999 


.07265 


77 


1.66661 


.46764 


1.78182 


1.57174 


.50902 


1.64427 


78 


.08970 


0.84813 


.14919 


0.90042 


.00072 


.07011 


79 


.25643 


1.95521 


0.25648 


1.95521 


0.23939 


0.23930 



aD x = v* a l x . 

a Df = a Dx+ a Dx + i 



a N x 
a N x 



' 2 a D x . 
= S a D x 



C 

X 

M' 



= v x+l,| 
x 

= sc'. 



348 



TABLE XXX. 

ANNUITIES, SINGLE PREMIUMS AND ANNUAL PREMIUMS. 

National Fraternal Congress Table of Mortality and Fraternal Society Total and Perma- 
nent Disability Experience and 4 Per Cent. 















Pa- 
yable 
thly 

QtstO 

1,000, 
h or 

lity 






Value 

nuity of 

payabl< 

mont 

instalm 




Single 
mium t 
sure $1 
at deal 
disabi 
claims m 




Annual 
mium pa 

by mon 
instalme: 

insure!: 
at deat 
disabi 


Age. 


log. a a* 2 


"a 12 

X 


log. a A* 2 


"A 12 

X 


log. a Pj 2 


a pI2 
X 


18 


1.29317 


19.64 


2.36133 


229.79 


1.06816 


11.70 


19 


.29025 


19.51 


.37099 


234.96 


.08074 


12.04 


20 


.28717 


19.37 


.38092 


240.39 


.09375 


12.41 


21 


.28393 


19.23 


.39101 


246.04 


.10708 


12.80 


22 


.28053 


19.08 


.40125 


251.91 


.12072 


13.20 


23 


.27698 


18.92 


.41162 


258.00 


. 13464 


13.64 


24 


.27326 


18.76 


.42213 


264.32 


.14887 


14.09 


25 


.26937 


18.59 


.43277 


270.88 


.16340 


14.57 


26 


.26531 


18.42 


.44353 


277.67 


. 17822 


15.07 


27 


.26107 


18.24 


.45439 


284.70 


. 19332 


15.61 


28 


' .25663 


18.06 


.46536 


291.98 


.20873 


16.17 


29 


.25197 


17.86 


.47645 


299.54 


.22448 


16.77 


30 


.24709 


17.66 


.48765 


307.36 


.24056 


17.40 


31 


.24197 


17.46 


.49898 


315.49 


.25701 


18.07 


32 


.23659 


17.24 


.51042 


323.91 


.27383 


18.79 


33 


.23094 


17.02 


.52198 


332.64 


.29104 


19.55 


34 


.22502 


16.79 


.53363 


341.69 


.30861 


20.35 


35 


.21880 


16.55 


.54537 


351.05 


.32657 


21.21 


36 


.21229 


16.30 


.55717 


360.72 


.34488 


22.13 


37 


.20543 


16.05 


.56903 


370.71 


.36360 


23.10 


38 


.19826 


15.79 


.58096 


381.03 


.38270 


24.14 


39 


.19072 


15.51 


.59293 


391.68 


.40221 


25.25 


40 


.18281 


15.23 


.60495 


402.67 


.42214 


26.43 


41 


. 17449 


14.95 


.61703 


414.03 


.44254 


27.70 


42 


.16573 


14.65 


.62913 


425.73 


.46340 


29.07 


43 


.15650 


14.34 


.64126 


437.78 


.48476 


30.53 


44 


.14680 


14.02 


.65342 


450.22 


.50662 


32.11 


45 


.13657 


13.70 


.66560 


463.02 


.52903 


33.81 


46 


.12574 


13.36 


.67781 


476.22 


.55207 


35.65 


47 


.11432 


13.01 


.69007 


489.86 


.57575 


37.65 


48 


. 10220 


12.65 


.70235 


503.91 


.60015 


39.82 


49 


.08934 


12.28 


.71465 


518.38 


.62531 


42.20 


50 


.07565 


11.90 


.72698 


533.31 


.65133 


44.81 


51 


.06113 


11.51 


.73931 


548.67 


.67818 


47.66 


52 


.04571 


11.11 


.75163 


564.46 


.70592 


50.81 


53 


.02922 


10.70 


.76393 


580.67 


.73471 


54.29 


54 


.01162 


10.27 


.77622 


597.34 


.76460 


58.16 


55 


0.99279 


9.84 


.78847 


614.43 


.79568 


62.47 


56 


.97264 


9.39 


.80067 


631.93 


.82803 


67.30 


57 


.95107 


8.94 


.81276 


649.77 


.86169 


72.73 


58 


.92792 


8.47 


.82474 


667.94 


.89682 


78.85 


59 


.90300 


8.00 


.83665 


686.52 


.93365 


85.83 


60 


.87614 


7.52 


.84838 


705.31 


.97224 


93.81 



349 



TABLE XXX. 

ANNUITIES, SINGLE PREMIUMS AND ANNUAL PREMIUMS— Continued. 

National Fraternal Congress Table of Mortality and Fraternal Society Total and Perma- 
nent Disability Experience and 4 Per Cent — Continued. 





Value of an- 
nuity of SI. 00 
payable by 

monthly 
instalments 




Single Pre- 
mium to in- 
sure $1,000, 
at death or 
disability 
claims monthly 




Annual Pre- 
mium payable 

by monthly 
instalments to 
insure? 1,000, 

at death or 
disability 


Age. 


log. a a* 2 


X 


log. a A* 2 


a A I2 

X 


log. *P^ 2 


a pI2 

X 


61 


.84716 


7.03 


.85994 


724.34 


2.01278 


102.99 


62 


.81565 


6.54 


.87137 


743.65 


.05572 


113.69 


63 


.78118 


6.04 


.88265 


763.22 


.10147 


126.32 


64 


.74337 


5.54 


.89375 


782.98 


.15038 


141.38 


65 


.70212 


5.04 


.90454 


802.68 


.20242 


159.37 


66 


.65705 


4.54 


.91494 


822.13 


.25789 


181.09 


67 


.60801 


4.06 


.92487 


841.14 


.31686 


207.42 


68 


.55476 


3.59 


.93414 


859.29 


.37938 


239.54 


69 


.49765 


3.15 


.94291 


876.82 


.44526 


278.78 


70 


.43642 


2.73 


.95089 


893.08 


.51447 


326.94 


71 


.37130 


2.35 


.95809 


908.01 


.58679 


386.18 


72 


.30231 


2.01 


.96452 


921.55 


.66221 


459.42 


73 


.22951 


1.70 


.97020 


933.68 


.74069 


550.41 


74 


.15301 


1.42 


.97517 


944.43 


.82216 


663.99 


75 


.07296 


1.18 


.97948 


953.85 


.90652 


806.34 


76 


1.99241 


.98 


.98303 


961.68 


.99062 


978.63 


77 


.90513 


.80 


.98619 


968.70 


3.08106 


1205.20 


78 


.81072 


.65 


.98894 


974.85 


.17822 


1507.40 


79 


.69878 


.50 


.99154 


980.71 


.29276 


1962.30 



350 



TABLE XXXI. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE. 



Age. 


lx 


d x 


Px 


Qx 


*aa 

*x 


,aa 
d x 


aa 

Px 


aa 

Qx 


20 


100000 


500 


.9950000 


.0050000 


100000 


498 


.994904 


.004976 


21 


99500 


501 


.9949648 


.0050352 


99490 


492 


.994923 


.004947 


22 


98999 


502 


.9949292 


.0050708 


' 98982 


498 


.994823 


.005027 


23 


98497 


503 


.9948932 


.0051068 


98473 


494 


.994805 


.005015 


24 


97994 


505 


.9948466 


.0051534 


97961 


499 


.994696 


.005094 


25 


97489 


507 


.9947994 


.0052006 


97446 


494 


.994677 


.005073 


26 


96982 


510 


.9947413 


.0052587 


96927 


500 


.994549 


.005161 


27 


96472 


513 


.9946824 


.0053176 


96403 


496 


.994540 


.005140 


28 


95959 


517 


.9946123 


.0053877 


95875 


500 


.994440 


.005220 


29 


95442 


522 


.9945307 


.0054693 


95343 


505 


.994349 


.005301 


30 


94920 


527 


.9944480 


.0055520 


94807 


510 


.994260 


.005380 


31 


94393 


533 


.9943534 


.0056466 


94266 


506 


.994249 


.005371 


32 


93860 


540 


.9942468 


.0057532 • 


93720 


520 


.994059 


.005551 


33 


93320 


548 


.9941277 


.0058723 


93167 


525 


.993950 


.005640 


34 


92772 


557 


.9939960 


.0060040 


92606 


530 


.993842 


.005718 


35 


92215 


567 


.9938513 


.0061487 


92035 


534 


.993714 


.005806 


36 


91648 


578 


.9936933 


.0063067 


91452 


547 


.993496 


.005984 


37 


91070 


591 


.9935105 


.0064895 


90857 


559 


.993288 


.006152 


38 


90479 


606 


.9933023 


.0066977 


90248 


571 


.993061 


.006329 


39 


89873 


622 


.9930791 


.0069209 


89622 


582' 


.992853 


.006497 


40 


89251 


640 


.9928292 


.0071708 


88979 


603 


.992535 


.006775 


41 


88611 


660 


.9925517 


.0074483 


88317 


613 


.992328 


.006942 


42 


87951 


683 


.9922343 


.0077657 


87636 


641 


.991920 


.007310 


43 


87268 


708 


.9918871 


.0081129 


86931 


659 


.991603 


.007577 


44 


86560 


734 


.9915203 


.0084797 


86200 


685 


.991195 


.007945 


45 


85826 


761 


.9911332 


.0088668 


85443 


710 


.990787 


.008313 


46 


85065 


790 


.9907130 


.0092870 


84659 


734 


.990390 


.008670 


47 


84275 


822 


.9902462 


.0097538 


83846 


766 


.989873 


.009137 


48 


83453 


857 


.9897307 


.0102693 


83001 


796 


.989357 


.009593 


49 


82596 


894 


.9891762 


.0108238 


82120 


826 


.988812 


.010058 


50 


81702 


935 


.9885560 


.0114440 


81200 


862 


.988149 


.010611 


51 


80767 


981 


.9878540 


.0121460 


80234 


903 


.987358 


.011252 


52 


79786 


1029 


.9871030 


.0128970 


79216 


949 


.986449 


.011981 


53 


78757 


1083 


.9862488 


.0137512 


78143 


1000 


.985413 


.012797 


54 


77674 


1140 


.9853233 


.0146767 


77007 


1047 


.984303 


.013597 


55 


76534 


1202 


.9842946 


.0157054 


75800 


1097 


.982982 


.014468 


56 


75332 


1270 


.9831413 


.0168587 


74510 


1154 


.981304 


.015486 


57 


74062 


1342 


.9818800 


.0181200 


73120 


1202 


.979489 


.016441 


58 


72720 


1418 


.9805006 


.0194994 


71619 


1255 


.977430 


.017530 


59 


71302 


1501 


.9789487 


.0210513 


70002 


1310 


.974820 


.018720 


60 


69801 


1588 


.9772496 


.0227504 


68243 


1358 


.971807 


.019893 


61 


68213 


1681 


.9753566 


.0246434 


66323 


1395 


.968721 


.021029 


62 


66532 


1778 


.9732760 


.0267240 


64245 


1434 


.964976 


.022324 


63 


64754 


1880 


.9709670 


.0290330 


61994 


1463 


.960274 


.023606 


64 


62874 


1985 


.9684289 


.0315711 


59529 


1482 


.954040 


.024890 


65 


60889 


2094 


.9656096 


.0343904 


56795 


1473 


.946052 


.025928 



351 

TABLE XXXI— Continued. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE— Continued. 



Age. 


lx 


d x 


Px 


q x 


•aa 


,aa 
d x 


aa 
Px 


aa 
Qx 


66 


58795 


2206 


.9624798 


.0375202 


53732 


1432 


.935705 


.026645 


67 


56589 


2318 


.9590380 


.0409620 


50276 


1355 


.922617 


.026953 


68 


54271 


2430 


.9552247 


.0447753 


46387 


1230 


.906733 


.026507 


69 


51841 


2539 


.9510233 


.0489767 


42062 


1069 


.890657 


.025403 


70 


49302 


2645 


.9463511 


.0536489 


37464 


866 


.865553 


.023117 


71 


46657 


2744 


.9411878 


.0588122 


32425 


636 


.841035 


.019605 


72 


43913 


2832 


.9355088 


.0644912 


27270 


404 


.815443 


.014827 


73 


41081 


2909 


.9291887 


.0708113 


22238 


199 


.789161 


.008949 


74 


38172 


2969 


.9222205 


.0777795 


17549 


43 


.762593 


.002477 


75 


35203 


3009 


.9145243 


.0854757 


13383 








76 


32194 


3026 


.9060073 


.0939927 


9780 








77 


29168 


3016 


.8965990 


.1034010 


6731 








78 


26152 


2977 


.8861655 


.1138345 


4228 








79 


23174 


2905 


.8746494 


. 1253506 


2213 








80 


20270 


2799 


.8619142 


.1380858 


844 








SI 


17471 
14812 


2659 
2485 


.8478049 
.8322306 


.1521951 
.1677694 


61 








82 




83 


12327 


2280 


.8150402 


. 1849598 




84 


10047 


2050 


.7959590 


.2040410 


lx, d x , Px and q x are taken from the 


85 


7997 


1800 


.7749156 


.2250844 


National Fraternal Congress Table of 
Mortality and the disability ratios 


86 


6197 


1539 


.7516540 


.2483460 


from the experience of four Fraternal 


87 


4658 


1277 


.7258480 


.2741520 


beneficiary societies. Modifications of 


88 


3381 


1023 


.6974268 


.3025732 


one or the other would have been 


89 


2358 


788 


.6658185 


3341815 


necessary in order to have assigned 


90 


1570 


579 


.6312102 


.3687898 


any deaths (d x ) to the l x column, 


91 


991 


404 


.5923310 


.4076690 


or to have obtained any positive 


92 
93 


587 
323 


264 
161 


.5502555 
.5015480 


.4497445 
.4984520 


values for q x and p x at any age 


94 


162 


89 


.4506173 


.5493827 


older than 74. I did not make the 


95 


73 


44 


.3972603 


.6027397 


modifications, but permitted the last 
three columns to vanish at age 75. 


96 


29 


19 


.3448276 


.6551724 


The formulas employed were those 


97 


10 


7 


.3000000 


.7000000 


given by Mr. F. B. Mead in his paper 


98 


3 


3 


.0000000 


1.0000000 


in the May, 1910, Transactions of the 
Actuarial Society for values at ages 












younger than 75. For ages 75 80 the 



following: d x = d x - lx = lx-i+ix-i~dx_,- l^ a =l x -lx(=d-ix-i. because q x a -0). 



For ages younger than 75: 



'x + i A x+i- 



,ij _ t aa aii.ii i ,aa ( y 1 i\_i_iii/i i\ 

lx+i-lx Px+lxPx = l x r x (j-2q x J+l x (l-q x j, 

and l x ^ 1 =l x4 . 1 -lv a r x ( 1 --2qx) _ lx( 1 -qx) 



352 



TABLE XXXII. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE. 



Age. 


1 U 


d x 


A 


4 


p x 


i 


ai 
Px 


ai 

q x 


20 


00 


2 


2191100 


876400 


.6000 


.4000 


.000096 


.000024 


21 


10 


6 


1314700 


456340 


.6529 


.3471 


.000107 


.000023 


22 


17 


8 


858360 


260600 


.6964 


.3036 


.000127 


.000023 


23 


24 


9 


597760 


160020 


.7323 


.2677 


.000155 


.000025 


24 


33 


11 


437740 


104440 


.7614 


.2386 


.000184 


.000026 


25 


43 


12 


333300 


71830 


.7845 


.2155 


.000223 


.000027 


26 


55 


14 


261470 


51670 


.8024 


.1976 


.000261 


.000029 


27 


69 


16 


209800 


38600 


.8160 


.1840 


.000290 


.000030 


28 


84 


18 


171200 


29750 


.8262 


.1738 


.000310 


.000030 


29 


99 


19 


141450 


23500 


.8339 


.1661 


.000321 


.000029 


30 


113 


21 


117950 


18883 


.8399 


.1601 


.000340 


.000030 


31 


127 


23 


99067 


15376 


.8448 


.1552 


.000351 


.000029 


32 


140 


24 


83691 


12637 


.8490 


.1510 


.000361 


.000029 


33 


153 


25 


71054 


10403 


.8536 


.1464 


.000380 


.000030 


34 


166 


27 


60651 


8691 


.8567 


.1433 


.000408 


.000032 


35 


180 


28 


51960 


7305 


.8594 


.1406 


.000446 


.000034 


36 


196 


31 


44655 


6172 


.8618 


.1382 


.000484 


.000036 


37 


213 


33 


38483 


5237 


.8639 


.1361 


.000522 


.000038 


38 


231 


35 


33246 


4465 


.8657 


.1343 


.000569 


.000041 


39 


251 


37 


28781 


3822 


.8672 


.1328 


.000607 


.000043 


40 


272 


39 


24959 


3282 


.8685 


.1315 


.000645 


.000045 


41 


294 


43 


21677 


2827 


.8696 


.1304 


.000682 


.000048 


42 


315 


45 


18850 


2441 


.8705 


.1295 


.000720 


.000050 


43 


337 


48 


16409 


2113 


.8712 


.1288 


.000767 


.000053 


44 


360 


51 


14296 


1833 


.8718 


.1282 


.000805 


.000055 


45 


383 


54 


12463 


1591 


.8723 


.1277 


.000843 


.000057 


46 


406 


57 


10872 


1384 


.8727 


.1273 


.000880 


.000060 


47 


429 


60 


9488 


1205 


.8730 


. 1270 


.000927 


.000063 


48 


452 


63 


8283 


1050 


.8732 


.1268 


.000983 


.000067 


49 


476 


67 


7233 


917 


.8733 


.1267 


.001058 


.000072 


50 


502 


70 


6316 


800 


.8733 


.1267 


.001161 


.000079 


51 


533 


75 


5516 


699 


.8733 


.1267 


.001302 


.000088 


52 


570 


80 


4817 


610 


.8733 


.1267 


.001471 


.000099 


53 


614 


87 


4207 


534 


.8732 


.1268 


.001677 


.000113 


54 


667 


95 


3673 


466 


.8732 


.1268 


.001967 


.000133 


55 


734 


105 


3207 


406 


.8732 


.1268 


.002388 


.000162 


56 


822 


118 


2801 


356 


.8731 


.1269 


.003006 


.000204 


57 


942 


139 


2445 


310 


.8731 


.1269 


.003811 


.000259 


58 


1101 


162 


2135 


271 


.8730 


.1270 


.004720 


.000320 


59 


1300 


194 


1864 


237 


.8730 


.1270 


.006050 


.000410 


60 


1558 


234 


1627 


207 


.8730 


.1270 


.007773 


.000527 


61 


1890 


283 


1420 


180 


.8730 


.1270 


.009599 


.000651 


62 


2287 


342 


1240 


158 


.8729 


.1271 


.011894 


.000806 


63 


2760 


414 


1082 


137 


.8729 


.1271 


.015096 


.001024 


64 


3345 


505 


945 


120 


.8728 


.1272 


.019730 


.001340 


65 


4094 


622 


825 


105 


.8728 


.1272 


.026238 


.001782 



353 

TABLE XXXII— Continued. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE— Continued. 



Age. 






i 


< 


i 
Px 


i 

q x 


ai 
Px 


ai 

q x 


66 


5063 


773 


720 


92 


.8727 


.1273 


.03525:) 


.002395 


67 


6313 


964 


628 


SO 


.8727 


.1273 


.047223 


.003207 


68 


7884 


1202 


548 


70 


.8726 


.1274 


.062507 


.004253 


69 


9779 


1472 


478 


61 


.8725 


.1275 


.078593 


.005347 


70 


11838 


1777 


417 


53 


.8724 


.1276 


. 104227 


.007103 


71 


14232 


2108 


364 


46 


.8722 


.1278 


. 130455 


.008905 


72 


16643 


2429 


318 


41 


.8719 


.1281 


.158867 


.010863 


73 


18843 


2710 


277 


36 


.8715 


.1285 


.188929 


.012961 


74 


20623 


2926 


241 


31 


.8710 


.1290 


.219777 


.015153 


75 


21820 


3009 


210 


27 


.8703 


.1274 


.251756 


.017444 


76 


22414 


3028 


183 


24 


.8693 


.1265 


.291617 


.020373 


77 


22437 


3016 


159 


21 


.8678 


.1273 


.347336 


.024584 


78 


21924 


2978 


138 


19 


.8654 


.1299 


.444460 


.032070 


79 


20961 


2904 


119 


16 


.8615 


.1342 


.575914 


.042816 


80 


19426 


2799 


103 


15 


.8555 


.1412 


.860776 


.066984 


81 


17410 


2659 














82 


14812 


2485 














83 


12327 


2280 














84 


10047 


2050 














85 


7997 


1800 














86 


6197 


1539 














87 


4658 


1277 














88 


3381 


1023 














89 


2358 


788 














90 


1570 


579 














91 


991 


404 














92 


587 


264 














93 


323 


161 














94 


162 


89 














95 


73 


44 














96 


29 


19 














97 


10 


7 














98 


3 


3 















TABLE XXXIII. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE AND FOUR PER CENT. 



Age. 


r x 


i x = 

r x (P a ) 


C 1 

X 


M 1 

X 


'C* 


>M X 


20 


.00012 


12 


384590.00 


886491.89 


5.2660 


3692.6142 


21 


.00013 


13 


192560.00 


501901.89 


5.4854 


3687.3482 


22 


.00015 


15 


105730.00 


309341.89 


6.0858 


3681.8628 


23 


.00018 


18 


62427.00 


203611.89 


7.0221 


3675.7770 


24 


.00021 


21 


39178.00 


141184,89 


7.8775 


3668.7549 


25 


.00025 


24 


25908.00 


102006.89 


8.6565 


3660.8774 


26 


.00029 


28 


17920.00 


76098.89 


9.7109 


3652.2209 


27 


.00032 


31 


12872.00 


58178.89 


10.3380 


3642.5100 


28 


.00034 


33 


9539.40 


45306.89 


10.5810 


3632.1720 


29 


.00035 


33 


7245.50 


35767.49 


10.1740 


3621.5910 


30 


.00037 


35 


5598.10 


28521.99 


10.3760 


3611.4170 


31 


.00038 


36 


4383.00 


22923.89 


10.2620 


3601.0410 


32 


.00039 


37 


3463.70 


18540.89 


10.1410 


3590.7790 


33 


.00041 


38 


2741.80 


15077.19 


10.0150 


3580.6380 


34 


.00044 


41 


2202.40 


12335.39 


10.3900 


3570.6230 


35 


.00048 


44 


1780.00 


10132.99 


10.7210 


3560.2330 


36 


.00052 


48 


1446.10 


8352.99 


11.2460 


3549.5120 


37 


.00056 


51 


1179.80 


6906.89 


11.4890 


3538.2660 


38 


.00061 


55 


967.21 


5727.09 


11.9140 


3526.7770 


39 


.00065 


58 


796.09 


4759.88 


12.0810 


3514.8630 


40 


.00069 


61 


657.31 


3963.79 


12.2170 


3502.7820 


41 


.00073 


64 


544.41 


3306.48 


12.3250 


3490.5650 


42 


.00077 


67 


452.00 


2762.07 


12.4060 


3478.2400 


43 


.00082 


71 


376.21 


2310.07 


12.6410 


3465.8340 


44 


.00086 


74 


313.81 


1933.86 


12.6690 


3453.1930 


45 


.00090 


77 


261.90 


1620.05 


12.6750 


3440.5240 


46 


.00094 


80 


219.06 


1358.15 


12.6630 


3427.8490 


47 


.00099 


83 


183.40 


1139.09 


12.6320 


3415.1860 


48 


.00105 


87 


153.66 


955.69 


12.7320 


3402.5540 


49 


.00113 


93 


129.03 


802.03 


13.0860 


3389.8220 


50 


.00124 


101 


108.24 


673.00 


13.6650 


3376.7360 


51 


.00139 


112 


90.94 


564.76 


14.5710 


3363.0710 


52 


.00157 


124 


76.31 


473.82 


15.5110 


3348.5000 


53 


.00179 


140 


64.23 


397.51 


16.8400 


3332.9890 


54 


.00210 


162 


53.90 


333.28 


18.7370 


3316.1490 


55 


.00255 


193 


45.15 


279.38 


21.4630 


3297.4120 


56 


.00321 


238 


38.07 


234.23 


25.4500 


3275.9490 


57 


.00407 


298 


31.87 


196.16 


30.6400 


3250.4990 


58 


.00504 


361 


26.79 


164.29 


35.6890 


3219.8590 


59 


.00646 


452 


22.53 


137.50 


42.9670 


3184.1700 


60 


.00830 


566 


18.92 


114.97 


51.7360 


3141.2030 


61 


.01025 


680 


15.82 


96.05 


59.7640 


3089.4670 


62 


.01270 


815 


13.35 


80.23 


68.8750 


3029.7030 


63 


.01612 


999 


11.13 


66.88 


81 . 1780 


2960.8280 


64 


.02107 


1254 


9. 38 


55.75 


97.9780 


2879.6500 


65 


.02802 


1591 


7.89 


46.37 


119.5300 


2781.6720 


66 


.03765 


2023 


6.65 


38.48 


146.1400 


2662.1420 


67 


.05043 


2535 


5.56 


31.83 


176.0800 


2516.0020 


68 


.06676 


3097 


4.68 


26.27 


206.8400 


2339.9220 


69 


.08394 


3531 


3.92 


21.59 


226.7600 


2133.0820 


70 


.11133 


4171 


3.27 


17.67 


257.5600 


1906.3220 


71 


.13936 


4519 


2.73 


14.40 


268.3100 


1648.7620 


72 


.16973 


4629 


2.34 


11.67 


264.2800 


1380.4520 


73 


.20189 


4490 


1.98 


9.33 


246.4800 


1116.1720 


74 


.23493 


4123 


1.64 


7.35 


217.6300 


869.6920 


75 


.26920 


3603 


1.37 


5.71 


182.8600 


652.0620 


76 


.31199 


3069 


1.17 


4.34 


149.7700 


469.2020 


77 


.37192 


2555 


.99 


3.17 


119.8900 


319.4320 


78 


.47653 


2144 


.86 


2.18 


96.7360 


199.5420 


79 


.61873 


1486 


.69 


1.32 


64.4690 


102.8060 


SO 


.92776 


919 


.63 


.63 


38.3370 


38.3370 

















TABLE XXXIV. 
FRATERNAL DEATH AND DISABILITY EXPERIENCE AND FOIR PER CENT. 



Age. 


X 


N aa 

X 


I) 1 

X 


D H 

X 


N 1 

X 


20 


45638.00 
43660.00 


915582.50 

S69944.50 


1000000.000 
576930.000 




2950822.04 


21 


3.9l" 


1950822.04 


22 


41767.00 


826284.50 


362190.000 


6.16 


1373S92.04 


23 


39953.00 


784517.50 


242530.000 


9. S3 


1011702.04 


24 


38216.00 


744564.50 


170770.000 


13.56 


769172.04 


25 


36554.00 


706348.50 


125030.000 


15.76 


59S402.04 


26 


34960.00 


669794.50 


94308.000 


20.36 


473372.04 


27 


33434.00 


634834.50 


72763.000 


24.09 


379064.04 


28 


31973.00 


601400.50 


57091.000 


27.16 


306301.04 


29 


30572.00 


569427.50 


45354.000 


31.61 


249210.04 


30 


29231.00 


538855.50 


36366.000 


34.61 


203856.04 


31 


27947.00 


509624.50 


29370.000 


36.77 


167490.04 


32 


26715.00 


481677.50 


23857.000 


40.54 


138120.04 


33 


25536.00 


454962.50 


19476.000 


42.47 


114263.04 


34 


.24407.00 


429426.50 


15985.000 


43.25 


94787.04 


35 


23323.00 


405019.50 


13167.000 


45.71 


7SS02.04 


36 


22284.00 


381696.50 


10881.000 


47.75 


65635.04 


37 


21288.00 


359412.50 


9016.700 


49.41 


54754.04 


38 


20332.00 


338124.50 


7489.800 


51.60 


45737.34 


39 


19414.00 


317792.50 


6234.600 


54.34 


38247.54 


40 


18534.00 


298378.50 


5198.800 


56.01 


32012.94 


41 


17688.00 


279844.50 


4341.400 


58.83 


26814.14 


42 


16876.00 


262156.50 


3630.100 


61.16 


22472.74 


43 


16097.00 


245280.50 


3038.500 


62.26 


18842.64 


44 


15348.00 


229183.50 


2545.300 


63.69 


15804.14 


45 


14628.00 


213835.50 


2133.700 


65.27 


13258.84 


46 


13936.00 


199207.50 


1789.700 


66.88 


11125.14 


47 


13271.00 


185271.50 


1501.800 


68.26 


9335.44 


48 


12632.00 


172000.50 


1260.600 


69.11 


7S33.64 


49 


12018.00 


159368.50 


1058.400 


69 . 19 


6573.04 


50 


11426.00 


147350.50 


888.750 


70.50 


5514.64 


51 


10856.00 


135924.50 


746.290 


71.82 


4625.89 


52 


10306.00 


125068.50 


626.670 


73.90 


3879.60 


53 


9775.10 


114762.50 


526.210 


76.85 


3252.93 


54 


9262.50 


104987.40 


441.810 


80.26 


2726.72 


55 


8766.80 


95724.90 


370.950 


84.78 


2284.91 


56 


8285.90 


86958.10 


311.450 


91.56 


1913.96 


57 


7818.80 


78672.20 


261.470 


100.65 


1602.51 


58 


7363.80 


70853.40 


219.510 


113.08 


1341.04 


59 


6920.50 


63489.60 


184.260 


128.62 


1121.53 


60 


6487.20 


56569.10 


154.670 


14S.11 


937.27 


61 


6062.20 


50081.90 


129.830 


172.76 


7S2.60 


62 


5646.40 


44019.70 


108.980 


201.01 


652.77 


63 


5239.00 


38373.30 


91.470 


233.25 


543.79 


64 


4837.30 


33134.30 


76.773 


271.72 


452.32 


65 


4437.50 


28297.00 


64.429 


319.92 


375.55 


66 


4036.70 


23859.50 


54.070 


380.43 


311.12 


67 


3631.90 


19822.80 


45.373 


455.98 


257.05 


68 


3222.00 


16190.90 


38.074 


547.65 


211.68 


69 


2809.20 


12968.90 


31.946 


653.17 


173.61 


70 


2405.90 


10159.70 


26.802 


760.24 


141.66 


71 


2002.20 


7753.80 


22.482 


S78.84 


. 114.86 


72 


1619.20 


5751.60 


18.855 


9SS.11 


92.38 


73 


1269.60 


4132.40 


15.808 


1075.75 


73.52 


74 


963.34 


2862.80 


13.246 


1132.11 


57.71 


75 


706.40 


1899.46 


11.094 


1151.74 


44.46 


76 


499.16 


1193.06 


9.284 


1137.60 


33.37 


77 


335.31 


693.90 


7.760 


1094. £0 


24.09 


78 


207.22 


358.59 


6.475 


1028.80 


16.33 


79 


108.38 


151.37 


5.388 


945.76 


9.85 


SO 


42.99 


42.99 


4.463 


842.77 


4.46 



INDEX 

Actuarial Principles, Application of t 147 

Adequate Rates 253 

Adverse Selection 247 

Age and Cost 160 

Algebraic Notation 193-217 

Annuities 193 

Disability rf 214 

Premiums 193 

American Notation 205 

Amortization of Bonds 250 

Annual Reports 276-284 

Annuity, Kinds of 250 

Assessments-as-needed Insurance 156 

Assessment Associations 91 -96 

Assets 246 

Associated Fraternities of America 62 -66 

Benefit Side to Insurance Contract 162 

Benefits, Varying 193,201 

British Notation ._•_ 205 

Calculations by Commutation Columns . 197 

Certificate, Kinds of * 219 

Child Insurance 97 

Commutation Columns, How to Use 216 

Commutation Tables, Explanation of , 150 

Constitutions, Difficulty of Interpreting 303 

Contracts, Variety of 106 

Contribution and Cost 159 

Contribution Side to Insurance Contract 162 

Contributions, Varying 196-202 

Cooperation 104 , 164 

Death Rate 157 

Definitions . 217-275 

Actual Mortality 247 

Adequate Rates 253 

Adverse Selection 247 

Amortization of Bonds 250 

Annuitant 250 

Annuity, Kinds of 250 

Assets . 246 

Certificate and Policy, Kinds of 219 

Comparison of Reserves 267 

Concomitants of Change 269 

Cost of Insurance 232 

Development of u and k 234 

Disability, Permanent and Total 274 

Discount and Present Value ■ 247 

Division of Premium Into "Expense," "Mortality" and "Reserve" Elements 236 



357 

Equity of Surrender Values ^ 235 

Expected Mortality 247 

Expiry 239 

Group Insurance 248 

Health and Accident Insurance... 273 

Incontestable '___ 239 

Indemnity Against Loss 219 

Individual Reserve 234 

Lapses 239 

Legal Reserve 251 

Liabilities 247 

Life Expectancy 231 

Loading 224 

Loans 238 

Maturity 239 

Methods of Insurance 258 

Mortality Rates 251 

Mortality Tables (See Contents) 220 

Mutual, Mixed and Stock Companies 247 

Natural Premiums 224,259 

Natural Premium Plan of Insurance 295 

Net Premiums 222 

Net Value 237 

Non-Forfeitable... 239 

Pensions 252 

Policy and Certificate, Kinds of 219 

Present Value and Discount 247 

Prospective Valuation 243 

Readjustments 274 

Renewal Premium 247 

Reserve 224 

Reserve, Initial, Mean and Terminal 245 

Reserve Values 245 

Retrospective Valuation 244 

Stock, Mixed and Mutual Companies 247 

Surplus 246 

Surrender Value 237 

Valuation 240 

Solvency, A Test for When 240 

Solvency, Not a Test for Fraternal Society 241 

Diagrams 148-9,223,228,230,266,268,278 

Disability, Permanent and Total 274 

Disability Symbols 214 

Distribution of Cost 158 

Equivalent Promises 155 

Exhibits.... . 1—167, 11—171, III— 180, IV— 181, V— 182, VI -183 

Expenses 119 

Expiry 239 

Expulsion of Members 301 

Flexible Premium System 93 

Fraternal and Life Company Contract Compared 154 



358 

Fraternal Beneficiary Societies 9-79, 104-1 1 1 

Associated Fraternities of America 62 

General Review of 104 

History of 9 

National Fraternal Congress and Legislation 16 -60 

Statistics of 75 

Fraternal Experience Tables 122 

Fraternity, Strength of 253 

Formulas to Memorize 204 

Friendly Societies 1-9 

History of 2 

Legislation Concerning 3 

Origin of 1 

Report of Royal Commission 7 

Group Insurance 248 

Health and Accident Insurance 273 

Incontestable 239 

Increasing Cost of Insurance 161 

Indemnity Against Loss 219 

Industrial Companie , History of 96 

Insurance Contract 153-161 

Age and Cost 160 

Assessment- as-needed 156 

Benefit Side and Contribution Side 162 

Contribution and Cost 159 

Death Rate . 157 

Distribution of Cost 158 

Equivalent Promises 155 

Fraternal and Life Company Compared 154 

Inception of 194 

Increasing Cost of Protection 161 

Law of Mortality 157 

Life Expectancy 161 

Method of Computing Rates ^ 156, 1 64 

Natural Premiums 161 

Possibility of Performance 161 

Insurance Cost 232 -237 

Interest Earnings 303 

Lapse Factor 177-190 

Feasibility of 184-11)0 

Premium Computation Including 177 

Lapses 177-190,239 

Law of Mortality 157 

Legal Reserve 251 

Level Annual Premium 54,61,125,172-5,179 

Computation of , 175 

Legislation 3,16-74,90,297-300 

Liabilities 247 

Life Expectancy 161, 231 

Life Insurance ( 'ompanies 80-91 

Fraternal Societies and Life Companies 80 

History of 81 



359 

Legislative Investigation 90 

Statistics of _ _, 90 

Loading 224 

Loans 238 

Maternity Benefits. _. 300 

Maturity ;_._ 239 

Methods of Insurance 258 

Mobile Bill 66-74,297-300 

Monthly Contributions 208-209 

Commutation Columns 208 

Formula * 209 

Mortality, Actual and Expected 247 

Mortality Rates (See Insurance Contract) 251 

Mortality Tables (See Tables in Contents 122,220 

A Fiction 209-210 

Diagrams 148 

Normal, Sub-Normal and Super-Normal 223-226 

Mutual, Mixed and Stock Companies 247 

National Fraternal Congress 16-60 

Legislation and Proceedings of 16 -60 

Report on Table of Mortality 52 

Natural Premiums ..161,224,259 

Natural Premium Plan of Insurance 259 

Net Contributions to be Valued 303 

Net Premiums 222 

Net Value 237 

New York Conference Bill 66-74,297-300 

Non-Forfeitable _ 239 

Observations on Present Industrial Regime 110 

Open Assessment Associations 91 -96 

Flexible Premium System 93 

History of 91 

Statistics of 95 

Operation Along Social and Fraternal Lines 108 

Pensions 252 

Policy, Kinds of 219 

Possibility of Performing Insurance Contract 163 

Preliminary Term Insurance 303 

Premiums, Level and Increasing 172-174,265-267 

Premiums, Single and Annual 164-172,207-212 

Premiums, Renewal 247 

Present Value 247 

Present Value of Benefits 164 

Present Value of Contributions 169 

Rates, Method of Computing 156,164 

Readjustments 111, 274 

Relations Between D & C, N & M, and S & R 205 

Reports to Insurance Commissioners 276-284 

Reserve 224-245 

Formulas for Computing 215 

Individual 234 

Initial, Mean and Terminal 245 



360 

Legal 251 

Methods of Determining Illustrated 216 

Values 245 

Risk, Accident, Death and Sickness _ 192 

Statistics and Explanations for Valuation „_ 276 

Stock, Mixed and Mutual Companies 247 

Surplus - 246 

Surrender Value 237 

Equity of 1 235 

Similar Symbols 213 

Symbols for Disability 214 

Symbols for Premiums and Annuities 193 

Tables (See Contents). 

Valuation 240 

Prospective 243 

Retrospective 244 

Test for Solvency When 241 

Valuation Statistics and Explanations «. 276 

Wives of Members, Benefits to 301 



CONTENTS. 

Pages 
Friendly Societies 1-9 

Origin, 1-2. History, 2-3. Legislation, 3-7. Report Royal Commission, 7-9. 

Fraternal Beneficiary Societies 4 9-79, 104-1 1 1 

Inequity of Original Plans, 12-16. History, 9-16. Legislation and Proceedings 
National Fraternal Congress, 16-60. Major N. S. Boynton, 50-53. Report on 
National Fraternal Congress Mortality Table, 53-58. Dr. Oronhyatekha, 60r-61 . 
Associated Fraternities of America, 62-66, 74-75. Statistics, 75-79. General 
Review, 104-111. 

New York Conference Bill (being the Mobile Bill Amended) 66-74 

Life Insurance Companies _^ 80-91 

Fraternal Societies and Life Companies, 80-81. History, 81^89. Statistics, 90. 
Legislative Investigation, 90-91. 

Open Assessment Associations 91-96 

History, 91-93. Flexible Premium System, 93-95. Statistics, 95-96. 

Industrial Companies 96-97 

History, 96-97. 

Child Insurance 97-104 

General Review 104-1 1 1 

Cooperation, 104, 164. Father Upchurch, 105. Variety of Contracts, 106, 107. 
Capacity of the Common People, 106. Ingenuity of Ignorance, 107. Actuarial 
Predictions not Verified, 108. Operation, along Social and Fraternal Lines, 109. 
In Harmony with Conditions, 1 10. The Present Industrial Regime and Observa- 
tions, 110-111. 

Readjustments 111-119 

Expenses 119-121 

Fraternal Experience Tables w _ 122-146 

Application of Actuarial Principles 147 

Mortality Tables 122-146,148-150 

Diagrams, 148, 149. 

Explanation of Commutation Columns 150-153 

The Insurance Contract 153-164 

Fraternal and Life Company Compared, 154-5. Equivalent Promises, 155-6. 
Assessments-as-Needed, 156. Method of Computing Rates, 156, 164-177. Law 
of Mortality, 157. Death Rate, 157-158. Distribution of Cost, 158-159. Con- 
tribution and Cost, 159-160. Age and Cost, 160-161. Natural Premiums, 161. 
Increasing Cost of Protection, 161. Life Expectancy, 161-162. Benefit Side 
and Contribution Side, 162-3. Possibility of Performance, 163. The Insurance 
Problem, 163-4. Cooperation, 164, 104. 

Present Value of Benefits 164-169 

Present Value of Contributions 169-172 

Level Annual Premium 172-174 

General Statement 175 

Another Method of Computation 175-177 

Computation Including Lapse Factor 177-183 

Feasibility of Lapse Factor 184-192 



362 

Pages 

The Insurance Liability 192-203 

Death, Accident and Sickness Risk, 192-3. Symbols for Premiums and Annui- 
ties, 193. Inception of the Contract, 194. Varying Benefits, 193-5, 201-3. 
Varying Contributions, 196-7, 202-3. 

Short Cuts in Calculations 197-206 

Commutation Columns, 197-206. C x , 197-199. M x , 198. D x , 199. N x , 199- 
200. P x = M x -r-N x , 200. Benefit Side and Payment Side, 200-2. 20-Year 
Term, 200. Pure Endowment, 200-1. Endowment Insurance, 201. Increas- 
ing or Cumulative Insurance^202. Varying Benefits, 193-5, 202-3. Varying 
Contributions, 196-7, 202-3. R. and S. Columns, 203. Formulas to Memorize, 
204. Relations Between D and C, N and M, and S and R, 205. American and 
British Notation, 205-6. 

Practical Application of Formulas 206-217 

Principle of Computations the same for Societies and Companies, 206. Assump- 
tions Different, 206. Single and Annual Premiums for Whole Life, Term and 
Limited Payment Insurance and for Whole Life, Deferred and Temporary An- 
nuities, 207-209. Commutation Columns for Monthly Contribution Rates, 
208-9. An Original but Uselessly Intricate Formula for N x 2 and M* 2 , 209-211. 
Annual and Single Premiums for Limited Payment and Endowment Insurances 
and Various Modifications of Insurances and Annuities, 211-212. A Novel 
Plan, 212-213. Similar Symbols, 213. 

Disability Symbols 214-215 

Formulas for Computing Reserves 215-216 

Three Methods Illustrated, 216. 

Use of Commutation Columns 216-217 

Illustrated by Examples, 216-217. 

An Englishman's Conclusion 21 7-219 

Teach Insurance in Public Schools. Lack of Information Amongst Teachers. 

Definitions 217-275 

Indemnity Against Loss, 219. Policy and Certificate, 219-220. Whole Life, 
Limited Payment, Endowment, Term, Renewable Term, Convertible Term, 
Instalment Policies or Certificates, 220. Mortality Tables, 220-222. Net Pre- 
miums, 222-224. Loading, 224. The Natural Premium, 224, 259. The Re- 
serve, 224-231. Life Expectancy, 231-232. Insurance Cost, 232-237. Devel- 
opment of u and k, 234. Individual Reserve, 234-236. Equity of Surrender 
Values, 235-236. Division of Premium into "Expense," "Mortality" and "Re- 
serve" Elements, 236. Reserve a Fiction, 236-237. The Net Value, 237. 
Surrender Value, 237-8. Loans, 238-9. Non-Forfeitable, 239. Incontestable, 
239. Lapses, 239. Expiry, 239. Maturity, 239-240. Valuation, 240-245. 
Difference for Life Companies and Fraternal Societies, 240-1. When a Test of 
Solvency, 241-2. Can not be Made Test of Solvency for Fraternal Society, 
241-3. Prospective Valuation, 243-4. When an Absurdity, 244. Results of, 
244. Retrospective Valuation, 244-5. Reserve Values, 245-6. "Initial," 
"Mean" and "Terminal" Reserves, 245-6. Surplus, 246. Assets, 246-7. Lia- 
bilities, 247. Stock, Mixed and Mutual Life Companies, 247. Renewal Pre- 
mium, 247. Present Value, 247. Actual Mortality, 247. Expected Mortality, 
247. Adverse Selection, 247. Group Insurance, 248-9-250. Annuity, Annui- 
tant, Life Annuity, Perpetual Annuity, Temporary Annuity, Contingent Annui- 
ty, Deferred Annuity, Joint Annuity, Survivorship Annuity, 250. Amortiza- 
tion of Bonds, 250-1. Legal Reserve, 251 . Mortality Rates, 251-2. Pensions, 
252-3. Strength of Fraternity, 253. Adequate Rates, 253-4. Competing for 
Adequacy, 254-5. Adequacy, Permanency, Attractiveness, 255-6-7. Legisla- 
tion, 257-8. Insurance Methods, 258-9. The Natural Premium Plan, 259-265. 
Level Premium Plan, 265-7. Comparison of Reserves, 267-8-9. The Last Man, 
269. Concomitants of Change, 269-270. Misleading Statements, 270-1 . Crit- 
icism, 271-2. The Home of Brotherhood, 272-3. Health and Accident Insur- 
ance, 273-4. Permanent Total Disability, 274. Readjustments, 274-5. 



363 

Pages 

Valuation Statistics and Explanations 276^300 

Compilation of Statistics, 276-283. Three Methods of Valuation Allowed by 
State Laws, 270-7. Form of Sheet for Protection, 276. Valuation Factors, 277. 
The n l'x and „K X Factors for Valuation under "Section 23b," 277. How to tran- 
scribe Data with Forms of Sheets, 277, S, 9, 280. How to Prepare Schedule VI 
of the Annual Report, 280-1. Additional Forms 281-2. Suitable for Tabulat- 
ing Deaths and Lapses, 282. Investigation of Mortality Experience, 282, 3. 
Examples of Valuations by the "Net Reserve," "Tabular" and "Accumulation" 
Methods, 283-296. "Net Reserve" Method, 283-4. "Tabular" Method, 284-5. 
Prospective Valuations, 285-6. Retrospective Valuations, 286-7. Identical 
Valuation Results under the three Methods with the same Tabular Contribution 
Rates, otherwise Different Results, 286. Valuation Results differ from Actual 
Results in Practical Operation, 287-8. Valuation on the "Accumulation Basis" 
Advocated by Commissioner Ekern and Actuary Anderson compared with the 
Treatment in this Book, 288-9. Retrospective Valuation compared with the 
Prospective Method, 289-296. Retrospective Valuation necessary for Appor- 
tionment of Funds, 289. "Net Reserve" Method applicable to Few Fraternal 
Societies, 289. Its Meaning, 290. "Tabular" Method has many advantages, 
290. "Accumulation" Method is Best Suited for the Majority of Societies and 
Especially Valuable in Connection with the "Tabular," 290-6. Examples of 
Prospective and Retrospective Valuations, 292-3-4. Section 23b, 297-300. 

Maternity Benefits 300- 1 

Benefits to Members' Wives 301-2 

General Comments 302-3 

Right to expel members not considered in Valuations, 301 . Difficulty to Inter- 
pret Constitutions, 303. Interest Earning Secondary, 303. "Net" Contribu- 
tions to be Valued, 303. Preliminary Term and Other Methods to Provide 
Expense, 303. 

TABLES 

Contribution Rates for Child Insurance 101-102 

Societies admitting Men only 122 

Societies Admitting Women only 123 

Societies Admitting Men and Women 123 

43 Societies Combined 123 

Contribution Rates for 43 Societies 125 

Mortality Tables of 43 Societies 128-133 

Attained Ages, Existing, Lapses, Deaths, Exposures, Unadjusted and Adjusted 
Death Ratios, 128-9. Unadjusted and adjusted l x (living) d x (dying) p x prob- 
ability of living, q x (probability of dying) 130-1. Test of Graduation, 132-3. 

Mortality Tables for Men only 134-137 

Attained Ages, Exposures, Unadjusted and Adjusted Death Ratios, l x (living) d x 

(dying), 134-5. Test of Graduation, 136-7. 
Mortality Tables for Women only 138-140 

Attained Ages, Exposures, Unadjusted and Adjusted Death Ratios, l x (living) 

d x (dying), 138 -9. Test of Graduation, 140. 

Mortality Tables for Men and Women 141-144 

Attained Ages, Exposures, Unadjusted and Adjusted Death Ratios, l x (living), 
d x (dying) 141-2. Test of Graduation, 143-4. 

Comparative D rath Ratios 1 45- 1 4 6 

Males. New English Experience, Scandinavian Experience, Australian Expe- 
rience, Canada Life, National Fraternal Congress, American Experience, Forty- 
three Societies. Females. Farr's, Scandinavian. 



364 

Pages 

Computation of Premiums 164-183 

Exhibit 1. Insurance Years, Instalments of Claims, Present Value of $1.00, 
Present Value of Claims (or Benefits), 167. Exhibit II. Beginning of Years, 
Instalments of Contributions, Present Value of Contributions, 171. Test of Com- 
puted Premiums, 176-7. Level Premiums with and without Lapse Factor, 179. 
Computations with Lapse Factor, 179. Computations with Lapse Factor — 
Exhibit III — Insurance years, Insurance at Beginning of Years, Probability of 
Dying, Instalment of Claims, Lapse Ratios, Terminations by Lapse, 180. 
Exhibit IV — Present Value of Claims, 181. Exhibit V — Insurance, Probability 
of Living, Protection at Beginning of Years, Instalments of Contributions, 182. 
Exhibit VI — Present Value of Contributions, 183. 

Computation of Reserves 216 

Illustrating Level and Increasing Premiums 261-262 

"Net Reserve" Valuation 283 

"Tabular" Valuation 284-285 

"Accumulation" Valuation 287 

Prospective and Retrospective Valuation 293-294 

Form for Credit Exhibit 297 

Appendix 304-355 

Table I. (N. F. C.) 304-305 

Age (x) Number Living (l x ), Number dying (d x ), Probability of Dying (q x ). 
Death Rate per 1000, Discounted Death-Rate (q x v x ), Life Expectancy (e x ) 
Average Duration of Life. 

Table II. (N. F. C. Com. Cols. & 4%) 306-307 

Age (x) Present value of One due n Years Hence (v x ), D x , N x , S x , C x , M x , R x . 

Table III. (N. F. C. Derived Values, 4%) 308-309 

Life Annuity (a x ). Whole Life, Single Premium (A x ). Whole Life Annual 
Premium (P x ) Term to Age 70, Annual Premium (| 7 o- x P x ) Annuity of $100 
Beginning at age 70. Annual premium Temporary Annuity to Age 70. 

Table IV. (N. F. C. and 4% Annual Premiums) . 310 

Twenty Payment Life ( 2 oP x ) Ten Payment Life (i P x ) Twenty Year Term 
( 1 2oP x ) Ten Year Term (| 10 P X ) Five Year Term (| 5 P X ). 

Table V. (N. F. C. & 4% Monthly Basis) 311 

N^,log. N* 2 , M* 2 , log. M\ 2 . 

Table V\ (N. F. C. & 4% Momently Basis) 312 

Life Annuity (a x ), Whole Life Annual Premium (A x ), Whole Life Annual 
Premium (P x ). 

Table VI. (N. F. C. and Z\% Com. Cols.) 313-314 

Dx, N x , Sx, C x , M x , R x . 

Table VII. (N. F. C. & 3% Com. Cols.) 315-316 

D x , Nx, S x , C x , M x , R x . 

Table VIII. (N. F. C. & 3-J-% and 3%) 317 

Life Annuity (a x ) Whole Life Single Premiums, (A x ) Whole Life Annual Premium 
(Px). 

Table IX. (N. F. C. & 3%, 3J% and 4% Monthly Premium Rates) 318 

Table X. (N. F. C. and 3%, 3J%, and 4%) 319 

Valuation Columns, u and k. 



365 

Pages 

Table XL (Makehemized N. F. C.) 320-321 

Number living (l x ) number dying (d x ) Probability of Living (p x ) Probability of 
dying (q x ) Force of Mortality (/**). 

Table XII. (Makehamized N. F. C. & 4%) D x , N x 322 

Table XIII. (Makehamized N. F. C. & 4%) , 323 

Life Annuity (a x ) Sing. Prem. (A x ) An. Prem. (P x ). 
Table XIV. (Makehamized N. F. C. & 4%, Two Lives) 324 

Living (W), Dying (dx*), log. \xx, log. dxx. Uniform Seniority. 
Table XV. Com. Cols, for Two Lives, 4% 326-327 

D^, N«, C M , M n . 
Table XVI. Derived Values Two Lives, 4% 328 

Life Annuity (a n ) Sing. Prem. (A xx ), An> Prem. (Pxx). 

Table XVII. N. F. C. Whole Life Terminal Reserves, 4% 329-333 

Table XVIII. American Experience Table of Mortality 334 

Living (l x ), Dying (d x ), Prob. Dying (q x ) Life Expectancy (e x ). 

Table XIX. Com. Cols, at 4%, D x , N x , M x , R x 335-336 

Table XX. Am. Experience Table 4% Values 337-338 

Life Annuity (a x ), W. L. Sing. Prem. (A x ), W. L. Annual Prem. (P x ), Valuation 

Cols, u and k. 

Table XXI. Interest Tables, Three Per Cent 7 339 

Amt. of 1.00 at End of n Years (l+i) n . Present Value of 1.00 Due n Years 
Hence (v n ). Amt. of 1.00 Per Annum at End of n Years (S^"| ). Present Value of 
1.00 Per Annum for n Years (a^j ). 

Table XXII. Interest Tables, 3J%, (Same as XXI) 340 

Table XXIII. Interest Tables, 4%, (Same as XXI) 341 

Table XXIV— Death and Disability (1902 Functions) 342 

N. F. C. Prob. of Dying (q x ),Prob. of Disability (i x ) Prob. of Death or Disability 

(q x = qx+ix). 

Table XXV. Combined Death and Disability 343 

Actives ( a l x ), Number Dying and Disabled at Age (x) out of a l x persons (d' x = a l x — 
a l x+] ), Number Disabled (*l x = a l x Xi x ). 

Table XXVI. Death and Disability Com. Cols., 4% 144 

a D x = v Xa l x , a N x =2 a D x . 

cW+*d' x , M>ZC' X . 
Table XXVII. Com. Cols. 4% Monthly 345 

a D^X 2 , C' X 12 ,M' X 12 . 
Table XXVIII. Disability only Com. Cols., 4% 346 

i C x = v x ^ li l x , iM x = 2*C x . 
Table XXIX. Logarithms of Com. Cols 347 

Table XXX. Derived Values, 4%, Monthly 348-349 

a 12 a A 12 a D i2 , , . , 

a x , A x , P x and logarithms. 

Table XXXI. Death and Disability (1910 Functions) 350-351 

N. F. C. l x , d x , p x and q x . 

Death and Disability l aa , d aa , p aa , q aa . 
Table XXXII. l u , d", l 1 , d 1 , p 1 , q 1 , p ai , q ai 352-352 

*x» ^x' *x» ^x» Hx» Mx» Fx » Hx 

Table XXXIII. r , i =r l aa , C , M 1 , J C , *M 354 

*x» *x *x*x » ^^x» A *x» ^^x' * x x 

Table XXXIV. D aa N aa D [ D H N H N 1 355 

*^ x » -^x » *-^x» *-^x> A, x» ^x 



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ERRATA 

« 58 -Line 2, last paragraph, "1899," not "1890. 

" 63.— Line 8, "Legion," not "League. ( ^ 

u 77 —Line 29, "Slavonian," not "Salvoman. 

m 78.— Line 13, "Protective," not "Protection 

" 93 and 94.— Last and first paragraphs should be leaded. 

94 —XJrie 6, "and," not "an." 

« 119.— -line 16, "low," not "lower/ 

" 192 -3-6.— Should be general headings. ^ 

« 204.— Line 3 from bottom, "S," not R. 

" 205.— Line 7, "Cm," not "c*" 

« 907 -Next to last line, insert "of 1" after contract. 

~" j / 12 12 \ ' ' 

« 208.— Twelfth formula, last term should be, "12 (N X -N X+1 J. 

» 910 —Third line from bottom, "s" in "month V o** of alignment. 

" 211. — Line 9 from bottom, "insured," not "insuranced." 

" 215. — Line 10, for "Another," write "A quite." 

" 216. — 'Line 10 should be "a x — a x+ i." 

" 216.-— In table, heading should be "No. 1 Continued." 

" 216— In table, lines 39 and 40, "a 22 -a 2 i" should be "a 22 -aa." 

" 217.— Line 4th from end of paragraph 1, should be "69," not "79." 

" 220. — Line 8, strike out comma after "death." 

" 224. — Line 10, "following" should be "preceding." 

" 232. — -Line 12, "insurance," not "insurants." 

" 234.— Lines 7, 8, 14 and 26, should be "1V35," not " lV35 ." 

" 234.— Third formula should be "P 35 X— -— =P8sXu35-k 35 =iV&" 

P35 p35 

" 235. — Line 18 should be comma, not semicolon, after "protection." 

" 240.— Line 12, "the," not "he." 

" 241. — Line 6, should be "amount," not "number." 

" 245.— Line 32, should be " 27.82," not 50.58." ^ 

" 263. — Line 15, after "gives" insert "the summation of." 

" 265. — Line 9, "heirs," not "heir." 

" 267.— Line 18, "I" instead of the editorial "we." 

" 271. — Line 8th from bottom, "bow-wows," not "bow-bows." 

" 2&2 — I in^ 17 ^nngP "thrpn" to "two" and "four" to "three." 

291.— Line 20, "the," not "these." 

" 299.— Line 25, "an," not "as." 

" 301.— line 36, "A^," not "A^y." 

" 304 and 5.— Heading "1000q x v," not "1000q x v x ." 
" 342.— "log. i 59 " should be ".81023," not ".91023." 

343. — "In heading and bottom page d 1 should be d'. 
" 354.— Table XXXIII, "i x " should be f %." 

358. — Add for reference pages at "Group Insurance 98-9." 

359. — Add for reference pages "Mortuary Accretions 260-1." 

364. — In proper place insert: 

"Maternity Benefits 300-1 . " 

"Benefits for Member's Wife 301-2." 

"General Comments 302-3/ ' 



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